Petition for Writ of Certiorari — Percan v. United States

Supreme Court, U.S.

\ FILED

01 201 AUG 01 2001

No. Ol- OFFICE OF THE CLERK

IN THE

Supreme Court of the United States

MAURIZIO PERCAN,

Petitioner,

v.

UNITED STATES OF AMERICA,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

IRVING COHEN

Attorney for Petitioner

233 Broadway, Suite 2701

New York, NY 10279

(212) 964-2544

Of Counsel:

JONATHAN I. EDELSTEIN

168391 ce

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

i

QUESTION PRESENTED

Did the United States Court of Appeals for the Second

Circuit err in holding that defendant Maurizio Percan’s

convictions of money laundering and money laundering

conspiracy under 18 U.S.C. §§ 1956(a)(1)(A)(i), 1956(h) and

1957(a) should not be grouped with his convictions of

interstate transportation of stolen property pursuant to

U.S.S.G § 3D1.2 for purposes of calculating his total offense

level?

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TABLE OF CONTENTS

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Jurisdictional Statement ................0 eee. l

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Reasons for Granting the Writ RA Gre ey ete 10

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TABLE OF CITED AUTHORITIES

Page

Cases

United States v. Cusumano, 943 F.2d 305 (3d Cir.

ENT R Gia wahwd wk ie bib’ ads theses codes 13,14

United States v. Kunzman, 54 F.3d 1522 (10th Cir

ego on Cb ce wk cused 15

United States v. LeBlanc,.24 F.3d 340 (ist Cir

Me atu Wa wh a's shou boeteecs cbectscaia 15

United States v. Leonard, 61 F.3d 1181 (Sth Cir

DINU HULG tc cocilb en nbnes sss 6 caseessel 14,15

United States v. Lombardi, 5 F.3d 568 (ist Cir

ee ON cel bce biweeeewe 15

United States v. Mullens, 65 F.3d 1160 (11th Cir

EL ES Se a eee 12

United States v. Napoli, 179 F.3d 1 (2d Cir. 1999) .. passim

United States v. O’Kane, 155 F.3d 969 (8th Cir.

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Cited Authorities

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Statutes:

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Rule:

United States Supreme Court Rule 10(a) ........ 10, 20

Other Authorities:

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CA EID chvcapnacycasesuecss 6, 10, 11, 20

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TABLE OF APPENDICES

Page

Appendix A — Opinion And Order Of The United

States Court Of Appeals For The Second Circuit

Dated, Decided And Filed May 3, 2001 ....... la

Appendix B — Judgment Of The United States

District Court For The Southern District Of New

York Dated March 13, 2000 ................. 22a

l

OPINIONS BELOW

~ The decision of the Court of Appeals, dated May 3, 2001,

is reported at United States v. Kalust, 249 F.3d 106 (2d Cir.

2001). (Appendix A).

JURISDICTIONAL STATEMENT

The judgment of the Court of Appeals for the Second

Circuit was entered on May 3, 2001. This Court

has jurisdiction to grant certiorari pursuant to 28 U.S.C.

§ 1254(1).

STATUTES INVOLVED

U.S.S.G. § 3D1.2:

§ 3D1.2. Groups of Closely-Related Counts

All counts involving substantially the same harm

shall be grouped together into a single Group.

Counts involve substantially the same harm within

the meaning of this rule:

(a) When counts involve the same victim and the

same act or transaction.

(b) When counts involve the same victim and two

or more acts or transactions connected by a

common criminal objective or constituting part -_

of a common scheme or plan.

(c) When one of the counts embodies conduct

that is treated as a specific offense characteristic

2

in, or other adjustment to, the guideline applicable

to another of the counts.

(d) When the offense level is determined largely

on the basis of the total amount of harm or loss,

the quantity of a substance involved, or some other

measure of aggregate harm, or if the offense

behavior is ongoing or continuous in nature and

the offense guideline is written to cover such

behavior.

18 U.S.C. § 1956(a)(1):

§ 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 [26 USCS § 7201 or 7206]; 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

3

(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.

18 U.S.C. § 1956(h):

(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.

18 U.S.C. § 1957(a):

§ 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).

STATEMENT OF FACTS

Petitioner Maurizio Percan (“Petitioner”) was charged

in a multi-count indictment with conspiracy under 18 U.S.C.

§ 371, interstate transportation of stolen property

under 18 U.S.C. § 2341, money laundering under 18 U.S.C.

§ 1956(a)(1)(A)(i) and 1957, and money laundering

4

conspiracy under 18 U.S.C. § 1956(h). (23a). The district

court had subject matter jurisdiction pursuant to 18 U.S.C.

§ 3231.

The essence of the charges in the indictment was that

petitioner, who was the principal of an automobile repair

shop in the Bronx doing business under the name of All in

One, conspired with others to steal air bags from motor

vehicles. (3a). The stolen air bags would then be shipped

under the auspices of All in One to buyers throughout the

country. (3a). The method by which the conspiracy was

carried out was that street-level thieves would steal the air

bags pursuant to purchase orders issued by petitioner and

would then bring the stolen parts to him and receive payment.

(3a). In all cases, petitioner would pay the thieves by check.

(13a). The shipment of the air bags to the buyers was

conducted by employees of All in One including Eileen

Kalust. (3a).

The money laundering charges were brought under

18 U.S.C. § 1956(a)(1)(A)() in that petitioner was charged

with reinvesting the proceeds of air bag sales into the

purchase of other air bags. (13a). Petitioner was not charged

with attempting to conceal either his criminal activity or the

origin of the proceeds thereof. Indeed, because all payments

were made by check and all proceeds were deposited into

All in One’s bank account, petitioner’s financial transactions

had exactly the opposite effect. Far from concealing his

activities, the deposits and payments left a readily traceable

paper trail at such time as his activities came under

- investigation.

Prior to trial, several of the street-level thieves, as well

as Kalust, entered pleas of guilty and cooperated with the

_— hp

5

government. After a jury trial, petitioner was convicted on

all charges against him. (3a). A presentence investigation

report (“PSI”) was duly prepared and sentencing was

scheduled.

The final PSI calculated petitioner’s total offense level

at 30, with the money laundering counts grouped separately

from the underlying stolen property and conspiracy offenses.

Prior to sentencing, petitioner submitted a memorandum

arguing that the counts relating to money laundering should

be grouped with the underlying offenses pursuant to U.S.S.G.

§ 3D1.1(2)(b), which would result in a total offense level

of 28 due to the lower number of groups. (4a).

The Government argued in favor of the PSI’s guideline

calculation, citing the Second Circuit’s decision in United

States v. Napoli, 179 F.3d 1 (2d Cir. 1999).

At the time of sentence, petitioner’s counsel argued that

this case fell into the “wiggle room” created by footnote 3 of

Napoli, in which the. Second Circuit had left open the

possibility that “the function of money laundering can

sometimes be so highly interwoven into a fraud scheme

that the fraud victim is the direct victim of the money

laundering as well, and the counts should be grouped

together.” Jd. at 8 n.3. Petitioner argued that his money

laundering acts, which amounted solely to reinvestment

rather than concealment, did not harm any societal interest

other than that impacted by the air bag thefts they promoted,

and that the victims of both were therefore identical. (4a).

However, the district court agreed with the Government’s

position and sentenced petitioner at an offense level of 30,

resulting in a sentence of 108 months’ incarceration. (5a).

6

Petitioner took a timely appeal to the United States Court

of Appeals for the Second Circuit, arguing inter alia that the

sentencing court erred in failing to group the counts relating

to money laundering with the underlying counts relating to

conspiracy and possession of stolen property under U.S.S.G.

§ 3D1.2(b). Specifically, petitioner argued that, because

his money laundering convictions related to use of money to

promote an ongoing criminal offense under 18 U.S.C.

§ 1956(a)(1)(A)(i) rather than to conceal criminal activity

under 18 U.S.C. § 1956(a)(1)(B), the victims of the money

laundering offenses were the same as those of the stolen

property offenses. Thus, Napoli — which had been decided

in the context of concealment money laundering — was not

controlling. Alternatively, petitioner argued that even under

Napoli, grouping was still proper because the conduct

involved in the money laundering offenses was inextricably

intertwined with the conduct constituting the underlying

counts.

The appeal was duly argued before the Second Circuit,

and on May 3, 2001, it rendered a decision. See United States

v. Kalust, 249 F.3d 106 (2d Cir. 2001). The two-judge

majority disagreed with appellant, finding that the victim of

promotion money laundering is society at large rather than

the individual victims of the crimes that were promoted.

6a-8a. The majority additionally explained that:

Permitting grouping in promotion, but not in

concealment, cases, as defendant requests, would,

incidentally, have the perverse effect of subjecting

to sentence enhancements those who launder the

proceeds of their criminal conduct and then cease

their unlawful activities, while not enhancing the

sentences of those, like Percan, who launder the

7

proceeds of their criminal conduct in order to use

the laundered funds to fuel additional criminal

activity.

8a n.4. The court also rejected petitioner’s alternative

argument that the conduct involved in the money laundering

and stolen property offenses was inextricably intertwined,

stating that:

Percan’s money laundering activity and his

participation in the stolen airbag conspiracy can

only be viewed as more interwoven than the

money laundering and fraud at issue in Napoli

insofar as this case involves promotion, and

Napoli concealment, money laundering. And, as

we have already said, that distinction does not

undermine the reasoning of Napoli. That is, it does

not, on its own, make the victims of the two crimes

the same for grouping purposes.

9a.

In a separate opinion concurring in the result only, Judge

Winter rejected the majority’s designation of victim.

Adopting petitioner’s distinction between concealment and

promotion money laundering, he wrote:

[I]n my view the victim of so-called promotion

money-laundering is not society at large, at least

on the present facts. To group counts under

Subsection 3D1.2(b), the “counts [must] involve

the same victim and two or more acts or

transactions connected by a common criminal

objective or constituting part of acommon scheme

8

or plan.” U.S.S.G. § 3D1.2(b) [. . .] Therefore,

society is the victim under the Guidelines only by

default when no direct victim can be identified.

lla-12a (Winter, J., concurring in the result) (citation

omitted). He further argued that:

Given these criteria, the caselaw that identifies

society as the victim of so-called concealment

money-laundering makes sense. Concealment

laundering follows a crime and by itself has no

identifiable victim. Moreover, unpenalized use of

a sophisticated and complex system of financial

institutions to disguise and transfer funds derived

from criminal activity would provide a general

incentive to engage in the whole universe of

crimes involving monetary gain. It is therefore fair

to say that the victim of concealment money-

laundering is society at large.

Promotion money-laundering is rather different.

The criminal acts here are the use of financial

institutions to process the proceeds of prior

crimes, to facilitate future crimes... Indeed,

“laundering” is a complete misnomer because the

future crimes will occur whether the defendant

violates the statute by depositing the proceeds

in a bank account or avoids the statute’s

prohibitions by keeping them under a mattress at

home. Far from disguising ill-gotten cash,

depositing the fruits of a crime in a bank account

openly controlled by the defendant, as occurred

here, leaves an incriminating paper trail for

investigators in the first place they would look.

9

One suspects that promotion money-laundering

has been made a crime not because it by itself

alters the character of the underlying crimes,

conceals the proceeds of those crimes (rather, it

provides a permanent record of them), or creates

incentives to engage in criminal activity generally

but because it relieves the government of having

to offer extensive proof of underlying crimes.

12a-13a. Thus, he determined that:

Because promotion money-laundering, by

definition, results in identifiable, additional

crimes, it usually produces identifiable victims,

and did so here, namely, the successive victims

of Percan’s airbag thefts. My colleagues agree that

those from whom airbags were stolen — the

victims of at least the interstate transportation of

stolen goods counts — are discrete individuals.

Therefore, because the fruits of earlier thefts were

deposited by Percan in his company’s bank

account and used to finance the theft of more

airbags from later victims, the later, identifiable,

victims of the airbag thefts also were victims of

the promotion laundering. To be sure, societal

interests were harmed every time Percan’s

conspiracy fed upon its past fruits to add more

victims. However, where there is harm to both

society and identifiable victims, the Guidelines’

Commentary expressly states that the proper

victim, for sentencing purposes, is the individual.

13a. However, Judge Winter ultimately disagreed with

petitioner’s contention that the money laundering counts

10

should have been grouped under U.S.S.G. § 3D1.2(b).

14a-15a. Instead, he stated that, since the individuals who

were victimized by petitioner’s money laundering activities

could not be precisely identified as those who were

victimized by his air bag thefts, the proper grouping rule

was the aggregation provision of U.S.S.G. § 3D1.2(d).

15a, 17a. Thus, because grouping under U.S.S.G. § 3D1.2(d)

would not affect the total offense level, Judge Winter

concurred in the majority’s affirmance of petitioner’s

sentence.

REASONS FOR GRANTING THE WRIT

This is a case that is appropriate — indeed, one that cries

out — for review pursuant to Supreme Court Rule 10(a).

As the Second Circuit majority acknowledged, this is a case

in which “a United States Court of Appeals has entered a

decision in conflict with the decision of another United States

Court of Appeals on the same important matter.” Specifically,

the Second Circuit decision in the instant case followed its

earlier decision in United States v. Napoli, 179 F.3d 1

(2d Cir. 1999) — a decision which is in direct conflict with

the controlling law of five other circuits. Moreover, the

conflict between Napoli and the Third, Fourth, Fifth, Seventh

and Eleventh Circuits is even sharper in the instant case

because — as stated by Judge Winter — appellant’s money

laundering activities have readily identifiable individual

victims.

The central issue of this case is whether the money

laundering counts should have been grouped with the

underlying stolen property counts pursuant to the directive

of the Sentencing Guidelines that all offenses resulting in

“substantially the same harm” shall be calculated together

11

in order to avoid imposition of excessive sentences through

stacking of counts. See U.S.S.G. § 3D1.2. This guideline

provides that separate counts “involve substantially the same

harm within the meaning of this rule” when, inter alia, they

“involve the same victim and two or more acts or transactions

connected by a common criminal objective or constituting

part of acommon scheme or plan.” U.S.S.G. § 3D1.2(b).

In Napoli, the Second Circuit addressed this issue

for the first time. The defendant in Napoli was convicted

under 18 U.S.C. § 1956(a)(1)(B), which prohibits the

concealment of illegally obtained funds. See id. at 3.

Specifically, the defendant attempted to conceal the origin

of illegally obtained assets by filtering his gains through

casino gambling and the accounts of third parties. See id. at

5-6. Thus, the Second Circuit held that this conduct

implicated societal interests far beyond those implicated by

the underlying offense.

Specifically, this type of money laundering “harms

society’s interest in discovering and deterring criminal

conduct, because by laundering the proceeds of crime, the

criminal vests that money with the appearance of legitimacy.”

Napoli, 179 F.3d at 8, citing United States v. O'Kane,

155 F.3d 969, 972 (8th Cir. 1998). In addition, the Napoli

court held that this variety of money laundering implicates

the societal interest in preventing the subversion of financial

institutions as a means of engaging in criminal conduct.

See Napoli, 179 F.3d at 7-8. Accordingly, the Napoli court

held that the victim of money laundering was society at large

rather than the individuals harmed by the underlying offenses,

and that money laundering should not be grouped with these

offenses for sentencing purposes. See id. at 8. It is on this

precedent that the Second Circuit relied in deciding the

instant case.

12

As the Napoli court acknowledged, however, other

circuit courts were split concerning the issue of whether

money laundering should be grouped with underlying

offenses. In United States v. Walker, 112 F.3d 163, 167

(4th Cir. 1997), for instance, the Fourth Circuit held that fraud

and money laundering counts should be grouped where the

“flaundered] funds were used to make fictitious interest

payments” which were necessary for the continuing fraud.

Similarly, in United States v. Mullens, 65 F.3d 1160

(11th Cir. 1995), money laundering and fraud counts were

grouped where “[l]aundering money by returning false profits

to some investors and paying expenses to maintain a facade

of success enabled [the defendant] to attract new investors

and keep old investors from discovering his deceit.” Mullens,

65 F.3d at 1164. In light of this, the Mullens court determined

that “the fraud and the money laundering were integral cogs

in continuing the scheme.” Jd.

The Seventh Circuit reached a similar conclusion in

United States v. Wilson, 98 F.3d 281 (7th Cir. 1996). In a

case in which the defendant was charged with fraud and

concealment money laundering, the court held that:

The central purpose of this section, as the Eleventh

Circuit has pointed out, “is ‘to combine offenses

involving closely related counts...’” and

Wilson’s convictions for mail fraud and money

laundering without question meet that criterion.

All of the money that Wilson laundered was

money defrauded from his investors, so “without

the fraud there would have been no funds to

launder. . .” Moreover, the money laundering took

place in an effort to conceal the fraud and keep

13

the entire scheme afloat. . . In this way, “both the

fraud and the money laundering were integral cogs

in continuing the scheme.”

Id. at 283 (citations omitted). Thus, the Seventh Circuit

“reject[ed] the government’s contention that these offenses

are inappropriate for grouping because they involve different

victims and thus different harms,” holding that:

Whether the offenses involve different victinis is,

as the background commentary notes, “[a] primary

consideration” in the grouping decision. There is

also a line of authority, on which the district court

relied, observing that the victim of mail fraud is

the person defrauded, while the victim of money

laundering is society at large. . . In the abstract,

that may be true. Yet... there is intuitive force to

the argument that the victim of the fraud is also a

victim of the transaction designed to hide or

“cleanse” the funds of which she was defrauded.

More to the point, the money laundering in this

case served to perpetuate the very scheme that

produced the laundered funds.

Id. (citations omitted).

The Third and Fifth Circuits have also held that money

laundering may be grouped with the underlying offense under

certain circumstances. Significantly, the distinction made by

those courts is exactly that urged by appellant in the Second

Circuit — namely, the distinction between concealment and

promotion money laundering. In United States v. Cusumano,

943 F.2d 305, 312-13 (3d Cir. 1991), where the defendant

was convicted of theft and bribery from an employee health

14

fund as well as money laundering, the Third Circuit

considered the propriety of grouping the offenses by inquiring

whether the money laundering convicfions and embezzlement

offenses harmed the same victim. It concluded that the victim

of the embezzlement offenses, as well as the laundering

offenses, was “the fund and its beneficiaries.” /d. at 313.

Thus, the court concluded that these offenses were “part of

one overall scheme to obtain money from the fund and

convert it to the use of Cusumano,” and should therefore be

grouped. /d.

In United States v. Leonard, 61 F.3d 1181 (Sth Cir. 1995),

the Fifth Circuit followed Cusumano. In doing so, it

specifically distinguished those cases holding that money

laundering harmed society at large:

because in none of those cases did the money

laundering activities of the defendants perpetuate

the underlying crimes. Here, however, Greene’s

money laundering activity, regardless of its limited

extent, advanced the mail and wire fraud scheme

that victimized nearly 500 people.

Id. at 1186. Thus:

... the money laundering offense was not

“ancillary” here. There was a single, integrated

scheme to obtain money from the elderly victims

and to use that money to facilitate the continuance

of the scam. The activities can not be neatly

separated. . . By conducting financial transactions-

paying callers, purchasing leads, paying phone

bills — with the victims’ money for the purpose

of bilking more people out of $ 395.50 each, the

ee

15

group of targeted victims became the victim of

the money laundering activity as well as the fraud

scheme. In this case, the district court properly

found that the money laundering and fraud

constituted part of the same continuing common

criminal endeavor.

Id. (citations omitted).

Standing against the holding of these cases, and in

agreement with Napoli, are the First, Eighth and Tenth

Circuits. See United States v. O’Kane, 155 F.3d 969, 972-73

(8th Cir. 1998); see also United States v. Kunzman, 54 F.3d

1522, 1531 (10th Cir. 1995); United States v. Lombardi,

5 F.3d 568, 570 (ist Cir. 1993). Thus, the Second Circuit

is distinctly in the minority. Moreover, the reasoning

of Lombardi — which involved concealment money

laundering — has subsequently been called into question by

the First Circuit. Specifically, in United States v. LeBlanc,

24 F.3d 340 (1st Cir. 1994) — which was cited with approval

in Napoli — the First Circuit noted that Congress passed the

Money Laundering Control Act of 1986 in order to add

punishment for “conduct that follows in time the underlying

crime rather than to afford an alternative means of punishing

the prior ‘specified unlawful activity.’ ” LeBlanc, 24 F.3d at

346 (emphasis added). As noted in Napoli, the majority of

concealment-type money laundering activity “follows in time

the underlying crime.” See Napoli, 179 F.3d at 8 n.3. In the

instant case, in contrast, the money laundering activity at

issue — in common with the majority of promotion-type

money laundering — was contemporaneous with the

underlying crime. Thus, it is doubtful whether the First

Circuit would follow the Second in declining to group money

16

laundering counts with underlying offenses where the type

of money laundering at issue is promotion rather than

concealment.

Moreover, the Second Circuit position is not only a

minority position; it is an incorrect position. It should be

noted that the Government itself, during the sentencing and

appellate proceedings in the instant case, repeatedly

emphasized the differences between the concealment and

promotion prongs of the money laundering statute. In the

context of the grouping rules, the distinction drawn by the

Government is indisputably correct. Simply put, the factors

that led the Napoli court to determine that acts of concealment

should not be grouped with the underlying offense are not

present in promotion cases.

Petitioner respectfully refers this Court to Judge Winter’s

concurring opinion below, which emphasizes the difference

between the two types of money laundering in the most

cogent possible fashion. See United States v. Kalust, 249 F.3d

106, 110-11 (2d Cir. 2001) (Winter, J., concurring in the

result). Specifically, in offenses involving concealment, the

act of money laundering is typically separate from the

underlying criminal conduct through which the laundered

funds were obtained. This is illustrated not least by

Napoli itself, in which the means by which the defendant

laundered his gains were entirely separate from the fraudulent

scheme through which he obtained them. See Napoli, 179

F.3d at 4-6. The act of casino gambling through which the

funds were made to appear legitimate had nothing to do with

the fraudulent sales of cigarettes that formed the underlying

criminal conduct. See id. The only point at which the casino

entered into the defendant’s criminal conduct was through

its use as a money-laundering device; it was not involved in

any way in the cigarette sales.

17

Where money laundering involves promotion of illegal

conduct, on the other hand, the laundering is typically

not independent of the underlying criminal activity.

Especially in cases involving reinvestment of illegally

obtained funds, the money laundering is simply one of the

acts that constitute an ongoing criminal scheme. The instant

case is a textbook example of this sort of money laundering.

Petitioner was accused of taking monies obtained through

the sale of stolen air bags and using them to purchase more

air bags. None of the money laundering acts of which he

was convicted involve any conduct independent of the

purchase and sale of stolen air bags. Accordingly, these acts

are part and parcel of a single ongoing course of criminal

activity rather than independent acts involving parties or

institutions not used in perpetrating the underlying offense.

In addition, the social interests harmed by concealment-

type money laundering are different from those harmed by

the promotion of unlawful activities. This is critical in that

Application Note 2 to U.S.S.G. § 3D1.2 provides that, “(flor

offenses in which there are no identifiable victims. .. the

‘victim’ for purposes of subsections (a) and (b) is the societal

interest that is harmed.” U.S.S.G. § 3D1.2, Application

Note 2. Thus, determining the societal interest that is harmed

by a money laundering offense is necessary to determining

whether the money laundering has the same victim as the

underlying criminal conduct.

In the proceedings below, the Government argued, based

on Napoli, that the money laundering and transportation of

stolen property offenses should not be grouped because the

victims of the underlying offenses were the owners of the

air bags while the victim of money laundering was society at

large. This is indeed the conclusion reached by this Court in

18

Napoli — but with respect to the concealment prong of the

money laundering statute rather than the promotion prong.

See Napoli, 179 F.3d at 7-8. Because the societal interests

harmed by concealment of ill-gotten gains are different from

those harmed by promotion of illegal activity, the reasoning

of Napoli leads to an entirely different conclusion when

promotion-type money laundering is considered.

In contrast, none of these interests were implicated by

the money laundering at issue in the instant case. Petitioner

did not subvert financial institutions or other legitimate

enterprises as a means of concealing criminal activity.

Nor did his money laundering activity have the effect of

making the underlying purchase and transportation of stolen

goods more difficult to detect. The money obtained through

the sale of the air bags was simply deposited in a bank

account, with no attempt made to conceal its origin, and then

withdrawn for the purpose of purchasing more air bags.

The effect of the money laundering was not to conceal the

origin of appellant’s funds or to deceive society into thinking

them legitimate, but only to enable the stolen air bag

enterprise to continue for a longer period. Thus, the

only societal interest implicated by this money laundering

activity was society’s interest in protecting the public from

theft — which is precisely the same interest that was breached

by the theft itself.

Accordingly, unlike the concealment-type money

laundering at issue in Napoli, the money laundering activity

in this case did not harm any societal interest other than that

harmed by the underlying criminal conduct. In fact, even

Napoli acknowledged that “the function of money laundering

can sometimes be so highly interwoven into a fraud scheme

that the fraud victim is the direct victim of the money

19

laundering as well, and the counts should be grouped

together.” See Napoli, 179 F.3d at 8 n.3. This is in fact

the very essence of the promotion variety of money

laundering — it enables illegal conduct to continue and thus

to reach victims who might not have been reached absent

the promotion. Accordingly, the victims of appellant’s stolen

air bag conspiracy were also direct victims of the money

laundering activities by which it was promoted.

The reasoning of the majority that grouping would

have the perverse effect of subjecting to sentence

enhancements those who launder the proceeds of

their criminal conduct and then cease their

unlawful activities, while not enhancing the

sentences of those. .. who launder the proceeds

of their criminal conduct in order to use the

laundered funds to fuel additional criminal

activity,

Kalust, 249 F.3d at 109 n.4, is flawed. It is self-evident that

the continuation of criminal activity carries a built-in

sentencing enhancement in the form of an increased loss

guideline. A person who “ceas[es his] unlawful activities”

will not cause as great an economic loss as one who conducts

“additional criminal activity,” and hence will receive a lesser

sentence. It is not necessary, as the majority would suggest,

to carve out an unwarranted exception to the grouping rules

in order to preserve equity in sentencing.

It should also be noted that, despite the cogency of Judge

Winter’s distinction between concealment and promotion

money laundering, his reasoning was likewise flawed.

Specifically, in concluding that the individual victims of

20

petitioner’s money laundering activities were not the same

as those of his air bag theft, he ignored the fact that petitioner

was convicted of an ongoing conspiracy. Rather than being

sentenced on the basis of one or two air bag thefts, the offense

level for the stolen property counts was based on the entire loss

caused by his conspiracy over a period of years. Thus, every

victim of the conspiracy was factored into petitioner’s sentence.

Since the money laundering counts cover a period beginning

after the commencement of the air bag conspiracy and ending

simultaneously with it, then every victim of the money

laundering was also a victim of the air bag theft. This is not a

case like those cited by Judge Winter which involved entirely

separate victims; rather, the victims of appellant’s money

laundering overlap those of the air bag conspiracy. There is

simply no way to separate the two; thus, the proper grouping

rule is U.S.S.G. § 3D1.2(b) rather than U.S.S.G. § 3D1.2(d).

Finally, the sheer number of cases in which this issue

has arisen indicates that it is an “important matter” and thus

suitable for this Court’s review under Supreme Court

Rule 10(a). The issue of whether money laundering counts

should be grouped with underlying offenses — and, if so, under

what rule — has been visited by no fewer than nine circuits

with widely varying results. Moreover, the frequency

with which money laundering, especially of the promotion

variety, is charged in Federal theft or fraud cases — a‘frequency.

which is made clear by even a cursory survey of the case

law — indicates that this issue will arise in many future cases.

This means that, due to the differing approaches taken by

the circuit courts, defendants in similar positions will be

sentenced differently depending upon where they committed

their crimes — an inequity that strikes at the very purpose of

the sentencing guidelines. This is an issue, and a case, that

cries out for certiorari.

ne

21

CONCLUSION

In light of the foregoing, this Court should grant the

instant petition for certiorari and, upon review, reverse the

judgment of the Court of Appeals and remand for

resentencing at a total offense level of 28.

Respectfully submitted,

IRVING COHEN

Attorney for Petitioner

233 Broadway, Suite 2701

New York, NY 10279"

(212) 964-2544

Of Counsel:

JONATHAN I. EDELSTEIN

APPENDIX

la

APPENDIX A — OPINION AND ORDER OF THE

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT DATED, DECIDED

AND FILED MAY 3, 2001

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

August Term, 2000

(Argued: January 9,2001 Decided: May 3, 2001)

Docket No. 00-1232

UNITED STATES OF AMERICA,

Appellee,

oe oe

EILEEN KaLust, Jose Diaz, RADHAMES MELO, aka “Radmes”,

aka “Raymond”, aka “Radhmes”, aka “Melo”, aka “Emesto”,

aka “Rhadames”, ELias ABREU, aka “Albino”,

aka “Roberto Abreu”, ALL IN ONE AUTO,

Defendants,

MAuRIZIO PERCAN,

Defendant-Appellant.

2a

Appendix A

Before:

VAN GRAAFEILAND, WINTER, and CALABRESI,

Circuit Judges.

Judge Winter concurs in a separate opinion.

* * *

CALABRESI, Circuit Judge:

Appellant Maurizio Percan (“Percan”) was convicted,

after a jury trial, on seventeen counts of criminal activity

related to his participation in a conspiracy to steal automobile

airbags and resell them to the public. He was subsequently

sentenced to 108 months in prison. In this appeal, Percan

challenges his sentence on three grounds. First, he contends

that, under U.S.S.G. § 3D1.2, the district court should have

grouped his convictions related to transportation of stolen

property with his convictions for money laundering. Second,

he argues that the district court committed an error of law in

refusing to grant him a downward departure, under U.S.S.G.

§ 5K2.0, on the ground that his money laundering conduct

was outside the heartland of the money laundering guidelines.

Finally, he challenges the district court’s application of a

four level sentence enhancement under U.S.S.G. § 3B1.1.

In this respect, Percan claims that the court’s conclusion that

he was the leader or organizer of criminal activity involving

five or more participants was erroneous.

3a

Appendix A

BACKGROUND

On April 17, 1998, appellant was charged, in a seventeen

count indictment, with transportation of stolen goods in

interstate commerce: in violation of 18 U.S.C. §§ 2314

and 2, money laundering in violation of 18 U.S.C.

§§ 1956(a)(1)(A)(i), 1957, and 2, and conspiracy to commit

these offenses. The evidence adduced at trial, much of

it presented through the testimony of cooperating

co-conspirators, demonstrated that Percan purchased over

‘one million dollars worth of airbags from defendants Abreu,

Acosta, Diaz, and Melo (“the airbag thieves”), who had stolen

thousands of airbags from cars parked on the streets of New

York and from dealer lots.' Through his business, All in One

Auto Parts, Inc. (“All in One Auto”), Percan then resold the

airbags to customers in all fifty states. The evidence showed

that Percan laundered the proceeds of his sales through the

bank accounts of All in One Auto and that the money from

the airbag sales was used to promote the ongoing conspiracy.’

On September 24, 1999, a jury in the United States

District Court for the Southern District of New York

convicted Percan on all counts. At Percan’s sentencing

1. On occasion, Percan provided the thieves with lists of

particular airbags he wanted.

2. The conspiracy was furthered by using the profits from the

sale of stolen airbags to pay some of All in One Auto’s expenses

and to pay the airbag thieves for stealing the goods. Defendant Eileen

Kalust, the bookkeeper at All in One Auto, was also charged in the

indictment for her role in facilitating the accounting relating to the

airbag sales.

4a

Appendix A

hearing, appellant’s counsel objected to the Probation

Department’s recommendation that, for purposes of U.S.S.G.

§ 3D1.2, the money laundering counts and the counts related

to interstate transportation of stolen goods constituted two

distinct groups of offenses. Percan objected to the separation

of his convictions into different groups because, if approved

by the court, this would result in a two point increase in his

guidelines level. See U.S.S.G. § 3D1.4. Percan argued that,

because the transportation of stolen goods and money

laundering activities involved “substantially the same harm”

and were “so intertwined that they cannot be separated,” they

should be considered a single group for sentencing purposes.

Appellant’s counsel also requested a downward departure

on the ground that, because Percan’s money laundering

conduct involved a simple “receipt and deposit” of funds, it

was “beyond the heartland of circumstances for which the

money laundering guideline was intended.” Finally, Percan

contended that he did not supervise the airbag thieves, and,

therefore, he should not be given a four level guidelines

enhancement for being a leader of criminal activity involving

five or more participants.

The district court rejected all of Percan’s arguments.

Judge Schwartz found that, under our decision in United

States v. Napoli, 179 F.3d 1 (2d Cir. 1999), the victims of

Percan’s money laundering activities were distinct from the

victims of his conduct with respect to transporting stolen

goods, and hence, these counts did not involve “substantially

the same harm” for purposes of the guidelines. As a result,

the court held that grouping Percan’s convictions under

U.S.S.G. § 3D1.2 was not appropriate. With respect to

Percan’s request for a downward departure, the court

j

}

;

i ereeiiniinsciiiiaeiiaiiaaiaaaiill

Sa

Appendix A

concluded that “what happened here is within the heartland

of the money laundering guidelines.” Judge Schwartz

explained that “the arguments made [by Percan] . . . in my

discretion, and in the law do not [merit] a downward

departure.” Judge Schwartz also held that an enhancement

under § 3B1.1 was appropriate because Percan “was the

organizer and the leader of this criminal activity and there is

overwhelming evidence to that effect.” In reaching this

conclusion, he noted that Percan “clearly supervised” the

airbag thieves, and he emphasized that at times Percan “told

the[ ] airbag thieves . . . what types of airbags he needed.”

Percan’s offense level was set at thirty, and he was

determined to be in criminal history category II. Accordingly,

he was sentenced to 108 months in prison.

DISCUSSION

On appeal, Percan reiterates each of the three challenges

to his sentence that were presented below.

In United States v. Napoli, this court addressed the

question of whether counts of fraud and money laundering

should be grouped. We acknowledged the existence of a split

among the circuits with respect to this question. See Napoli,

179 F.3d at 7 (citing United States v. Wilson, 98 F.3d 281,

283 (7th Cir. 1996) (permitting grouping); United States v.

Mullens, 65 F.3d 1560, 1564 (11th Cir. 1995) (same); United

States v. Leonard, 61 F.3d 1181, 1186 (Sth Cir. 1995) (same);

United States v. Hildebrand, 152 F.3d 756, 763 (8th Cir.

1998) (rejecting a request to group money laundering and

fraud counts); United States v. O’Kane, 155 F.3d 969, 972-73

6a

Appendix A

(8th Cir. 1998) (same); United States v. Kunzman, 54 F.3d

1522, 1531 (10th Cir. 1995) (same); United States v.

Lombardi, 5 F.3d 568, 570 (1st Cir. 1993) (same)). And we

joined the First, Eighth, and Tenth Circuits in denying

grouping. Jd. at 7.

Our holding in Napoli was predicated on the requirement

in U.S.S.G. § 3D1.2(b) that, for grouping to be appropriate,

the counts must “involve the same victim.” We concluded

that “[t}he ‘victims’ of fraud counts are those persons who

have lost money or property as a direct result of the fraud,”

while “[t]he ‘victim’ of money laundering is, by contrast,

ordinarily society at large.” Jd. at 7. Appellant presents two

arguments to support his claim that Napoli does not control

this case.

First, he contends that, because Napoli involved

so-called “concealment” money laundering under 18 U.S.C.

3. In this respect, we relied on Application Note 2 to U.S.S.G.

§ 3D1.2, which states that “[t]he term ‘victim’ is not intended to

include indirect or secondary victims. Generally, there will be one

person who is directly and most seriously affected by the offense

and is therefore identifiable as the victim. For offenses in which

there are no identifiable victims ... the ‘victim’ for purposes of

[the relevant Guidelines] is the societal interest that is harmed.”

U.S.S.G. § 3D1.2, App. Note 2, cited in Napoli, 179 F.3d at 7.

We also explained, in a footnote, that it was not necessary to

“decide . . . whether we agree with those circuits that have held that

the function of money laundering can sometimes be so highly

interwoven into a fraud scheme that the fraud victim is the direct

victim of the money laundering as well, and the counts should be

grouped together.” /d. at 8 n.3.

7a

Appendix A

§ 1956(a)(1)(B), whereas his conviction related to “promotion”

money laundering under 18 U.S.C. §§ 1956(a)(1)(A)(i), the

grouping analyses differ. Specificaily, appellant urges that

in “concealment” cases, “the act of money laundering is

typically separate from the underlying criminal conduct,”

while “money laundering [that] involves promotion of illegal

conduct ... is typically not independent of the underlying

criminal activity.” In the latter class of cases, appellant

claims, there is “a single ongoing course of criminal activity”

and so grouping is called for.

Percan explains that in “concealment” cases, the money

laundering at issue “harms society’s interest in discovering

and deterring criminal conduct, because by laundering the

proceeds of crime, the criminal vests that money with the

appearance of legitimacy.” Appellant’s Br. at 20 (citing

O’Kane, 155 F.3d at 972). In contrast, Percan argues, in

“promotion” cases such as this one, “none of these interests

[is] implicated,” because the “money laundering activity

[does not] have the effect of making the underlying [crime]

more difficult to detect.” Jd.

Like the district court, however, we do not agree with

appellant that the victims of Percan’s conduct in transporting

stolen airbags are the same as the victims of his money

laundering activity. Cf United States v. Green, 225 F.3d 955,

960 (8th Cir. 2000) (“Reinvestment itself does not make the

victim of money laundering the same as the victim of fraud,

although it certainly allows the criminal to increase the

number of his fraud victims.”). Moreover, by depositing the

proceeds of the airbag sales in All in One Auto’s bank

accounts, Percan attempted to give these funds “the

8a

Appendix A

appearance of legitimacy.” Jd. As a result of this appearance,

society’s interest in “discovering and deterring criminal.

conduct” was harmed, just as it is in concealment cases.

Significantly, while there is a circuit split with respect

to the question of whether, as a general matter, money

laundering and fraud counts ought to be grouped for

sentencing purposes, see supra p. 2929, none of the circuits

has, to date, adopted a regime under which promotion money

laundering results in grouping, while concealment money

laundering does not.‘ And we see no basis for drawing such

a distinction.

Our conclusion also finds support in the language of the

Introductory Commentary to U.S.S.G. § 3D. There, the

Sentencing Commission explains that “[t]he rules in this Part

seek to provide incremental punishment for significant

additional criminal conduct.” In this case, if the district court

had grouped all of Percan’s convictions, then his offense

level would have been 28, just as it would have been had he

only engaged in money laundering and not interstate

4. The question appears to be an open one in the Seventh

Circuit. See United States v. Emerson, 128 F.3d 557, 564-65 (7th

Cir. 1997).

Permitting grouping in promotion, but not in concealment,

cases, as defendant requests, would, incidentally, have the perverse

effect of subjecting to sentence enhancements those who launder

the proceeds of their criminal conduct and then cease their unlawful

activities, while not enhancing the sentences of those, like Percan,

who launder the proceeds of their criminal conduct in order to use

the laundered funds to fuel additional criminal activity.

' 9a

Appendix A

transportation of stolen goods as well. By separating

appellant’s offenses into two groups, the district court

properly provided for incremental punishment, based on the

fact that Percan’s violations of 18 U.S.C. §§ 2314 and 2

constituted significant additional criminal conduct above and

beyond his money laundering. See Green, 225 F.3d at 959.

Second, appellant contends that, even if we decline to

draw a categorical distinction between concealment and

promotion money laundering, it is still possible, after Napoli,

to group all of his convictions. In pressing this claim, Percan

relies on the footnote in Napoli that reserved decision on

whether, in some circumstances, money laundering is “so

highly interwoven into a fraud scheme that the fraud victim

is the direct victim of the money laundering as well.” Napoli,

179 F.3d at 8 n.3. Appellant claims that his is just such a

case and, therefore, that grouping is in order.

We disagree. Percan’s money laundering activity and

his participation in the stolen airbag conspiracy can only be

viewed as more interwoven than the money laundering and fraud

at issue in Napoli insofar as this case involves promotion, and

Napoli concealment, money laundering. And, as we have

already said, that distinction does not undermine the reasoning

of Napoli. That is, it does not, on its own, make the victims

of the two crimes the same for grouping purposes.

Appellant’s other claims can be dealt with summarily.

Ordinarily, we lack jurisdiction to review a district court’s

denial of a downward departure. See, e.g., United States v.

Lawal, 17 F.3d 560, 562 (2d Cir. 1994). “The only exceptions

to this rule are . . . where the defendant shows that a violation

10a

Appendix A

of law occurred, that the Guidelines were misapplied, or that

the refusal to depart was based on the sentencing court’s

mistaken conclusion that it lacked the authority to depart.”

United States v. Zapata, 135 F.3d 844, 846 (2d Cir. 1998)

(internal quotation marks omitted) (alteration in original).

The district court’s conclusion that Percan’s money laundering

activity fell within the heartland suffers from none of these

defects and we, therefore, lack jurisdiction to review it.°

Finally, we affirm, for substantially the reasons the

district court gave, its decision that a four level sentence

enhancement, under U.S.S.G. § 3B1.1, was proper.

oe * *

The judgment of the district court is AFFIRMED.

5. Appellant attempts to rest appellate jurisdiction on the notion

that a departure was required in this case because his conduct was

outside the heartland as a matter of law. He buttresses this claim by

pointing to a Justice Department memorandum to Congress

indicating that “a modification of the guidelines might be appropriate

to address ... ‘receipt and deposit cases.’ ” Appellant also cites a

number of cases deeming “receipt and deposit cases” to fall outside

the heartland of the money laundering guideline.

These arguments fail to persuade. First, the fact that the Justice

Department manifested a desire to see the guideline changed for -

“receipt and deposit” cases is a far cry from placing such cases

outside the heartland under the existing Guidelines. In addition, and

obviously, the fact that some courts have concluded that certain

“receipt and deposit” cases are outside the heartland, see, e.g., United

States v. Woods, 159 F.3d 1132, 1133-34 (8th Cir. 1998), does not

mean that all cases that fit into this category merit similar treatment

for sentencing purposes, and do so as a matter of law.

@tivA Wtte aod BAU 27

lla

Appendix A

Winter, Circuit Judge, concurring in the result:

I write separately because I view the pertinent issue

somewhat differently from my colleagues. However, my

analysis does not affect the result. I therefore concur.

a) Designation of Victim

First, in my view the victim of so-called promotion

money-laundering is not society at large, at least on the

present facts. To group counts under Subsection 3D1.2(b),

the “counts [must] involve the same victim and two or more

acts or transactions connected by a common criminal

objective or constituting part of acommon scheme or plan.”

U.S.S.G. § 3D1.2(b). The following Commentary accompanies

the Subsection:

The term “victim” is not intended to include

indirect or secondary victims. Generally, there

will be one person who is directly and most

seriously affected by the offense and is therefore.

identifiable as the victim. For offenses in which

there are no identifiable victims (e.g., drug or

immigration offenses, where society at large is

- the victim), the “victim” for purposes of

subsections (a) and (b) is the societal interest that

is harmed. In such cases, the counts are grouped

together when the societal interests that are

harmed are closely related.

Id. § 3D 1.2, cmt. n.2. Therefore, society is the victim under

the Guidelines only by default when no direct victim can be

12a

Appendix A

identified. See, e.g., United States v. Hibbler, 159 F.3d 233,

237 (6th Cir. 1998) (“Only in those instances where there is

no identifiable victim should a court deem the primary victim

to be society.”).

Given these criteria, the caselaw that identifies society

as the victim of so-called concealment money-laundering

makes sense. Concealment laundering follows a crime and

by itself has no identifiable victim. Moreover, unpenalized

use of a sophisticated and complex system of financial

institutions to disguise and transfer funds derived from

criminal activity would provide a general incentive to engage

in the whole universe of crimes involving monetary gain. It

is therefore fair to say that the victim of concealment money-

laundering is society at large.

Promotion money-laundering is rather different. The

criminal acts here are the use of financial institutions to

process the proceeds of prior crimes, to facilitate future

crimes. See 18 U.S.C. §§ 1956(a)(1)(A)(i), 1957(a). Indeed,

“laundering” is a complete misnomer because the future

crimes will occur whether the defendant violates the statute

by depositing the proceeds in a bank account or avoids the

statute’s prohibitions by keeping them under a mattress at

home.’ Far from disguising ill-gotten cash, depositing the

1. Six of the laundering counts in this case alleged violations

of 18 U.S.C. § 1957. Section 1957 does not have a specific

requirement that the laundering be of the “promotion” variety.

However, since it is clear that all of Percan’s laundering activities

were designed to promote further crimes, my analysis regarding the

designation of the victims of his laundering is the same with respect

to all of the laundering counts.

MOTT ASPEN

13a

Appendix A

fruits of a crime in a bank account openly controlled by the

defendant, as occurred here, leaves an incriminating paper

trail for investigators in the first place they would look. One

suspects that promotion money-laundering has been made a

crime not because it by itself alters the character of the

underlying crimes, conceals the proceeds of those crimes

(rather, it provides a permanent record of them), or creates

incentives to engage in criminal activity generally but

because it relieves the government of having to offer

extensive proof of underlying crimes. For example, the

present indictment contains only two stolen goods counts

and fifteen money laundering counts, although Percan’s

thefts of airbags numbered in the thousands.

Because promotion money-laundering, by definition,

results in identifiable, additional crimes, it usually produces

identifiable victims, and did so here, namely, the successive

victims of Percan’s airbag thefts. My colleagues agree that

those from whom airbags were stolen — the victims of at

least the interstate transportation of stolen goods counts —

are discrete individuals. Therefore, because the fruits of

earlier thefts were deposited by Percan in his company’s bank

account and used to finance the theft of more airbags from

later victims, the later, identifiable, victims of the airbag

thefts also were victims of the promotion laundering. To be

sure, societal interests were harmed every time Percan’s

conspiracy fed upon its past fruits to add more victims.

However, where there is harm to both society and identifiable

victims, the Guidelines’ Commentary expressly states that

the proper victim, for sentencing purposes, is the individual.

U.S.S.G. § 3D1.2(b) requires that counts have the same

victim if they are to be grouped. My colleagues’ position,

14a

Appendix A

that individuals are the victims of the stolen-goods scheme

while society is the victim of the promotion money-

laundering, renders grouping under Subsection (b)

inappropriate. My position — that the victims of Percan’s

promotion money-laundering are those from whom airbags

were stolen rather than society—alters the grouping analysis

but leads to the same result.” As the present indictment is

framed, it is difficult to say that the victims of the two airbag

theft counts, those “directly and most seriously affected by

the offense,” U.S.S.G. § 3D1.2, cmt. n. 2, are the same as

the victims of the fifteen laundering counts. With respect to

the stolen goods counts, the indictment charges Percan with

conspiring to and carrying out a conspiracy to transport stolen

goods in interstate commerce from May 1995 until

approximately April 1998. Each money laundering count,

however, focuses on a narrower timeframe. Nine of the

fifteen money laundering counts allege laundering beginning

in January 1996; four allege it beginning in February 1996;

one alleges it beginning in March 1996; and one alleges it

beginning as late as December 1997. Clearly, an individual

from whom an airbag is stolen today is not a victim of

promotion money-laundering that begins tomorrow. Thus,

we cannot say that every victim of the acts alleged in the

stolen goods counts, which began in 1995, also is a victim

of all of the acts alleged in the laundering counts, some of

which began as late as 1997.

Because the victims of the successive airbag thefts were

a series of different individuals — rather than, say,.a single

2. The indictment in the present matter makes no attempt at

identifying the victims of airbag thefts “promoted” by the money

laundering.

15a

Appendix A

airbag manufacturer — grouping under Subsection 3D1.2(b)

would be impermissible even if the indictment contained a

count for each theft, unless it also contained the

corresponding laundering counts. See id., cmt. background

(“Counts involving different victims . . . are grouped together

only as provided in subsection (c) or (d).””); see also United

States v. Clark, 178 F.3d 290, 293-94 (Sth Cir. 1999) (holding

two counts of resisting arrest arising from single incident

should not have been grouped under Subsection 3D1.2(a) or

(b) because there were two separate victims of defendant’s

resisting arrest, the two deputy marshals); United States v.

Edmonds, 103 F.3d 822, 826 (9th Cir. 1996) (refusing to

group under Subsection 3D1.2(b) where “more than one

victim suffered because of [defendant’s] mischief,” since

defendant’s making of false statements to law enforcement

officials harmed both those about whom defendant spoke as

well as those to whom he lied); United States v. Gist, 101

F.3d 32, 34 (Sth Cir. 1996) (rejecting grouping under

Subsection 3D1.2(b) where defendant disposed of hazardous

waste at two different sites, thereby affecting different

victims in different neighborhoods); United States v. Brown,

14 F.3d 337, 341 (7th Cir. 1994) (holding two counts of

kidnapping could not be grouped under Subsection 3D1.2(b)

where each count alleged kidnapping of a different victim).

Because grouping the stolen goods counts with the money

laundering counts was improper, I agree with the result

reached by my colleagues.

b) Grouping the Laundering Counts

Viewing the victims of Percan’s promotion money-

laundering as individuals who had airbags stolen from them,

l6a

Appendix A

rather than society, has other consequences. In the

Presentence Investigation Report, the Probation Office

recommended that the two stolen goods counts be grouped

under Subsection 3D1.2(d) and that the fifteen money

laundering counts be separately grouped under Subsection

3D1.2(b). The seventeen counts were thus consolidated in

two groups. The district court accepted this recommendation,

and neither Percan nor the government questions the original

grouping into two groups. (Percan challenges only the failure

to group all counts under Subsection (b).) However, I regard

the grouping of the money laundering counts under

Subsection (b) as plain error. See Fed. R. Crim. P. 52(b).

As noted, Subsection 3D1.2(b) requires that every count

have the same victim in order for grouping to occur. For the

reasons set out above, the fifteen money laundering counts

do not each have the same victim. Nevertheless, these counts

could have properly been grouped under Subsection (d),

which allows grouping “[w]hen the offense level is

determined largely on the basis of the total amount of harm

or loss, the quantity of a substance involved, or some other

measure of aggregate harm, or if the offense behavior is

ongoing or continuous in nature and the offense guideline is

written to cover such behavior.” U.S.S.G. § 3D1.2(d). The

Subsection also lists certain offenses that are to be grouped

under it, and the Guidelines sections covering the types of

money laundering alleged in this case, Sections 2S1.1 and

281.2, are explicitly listed under (d) as offenses that should

be grouped. Under Section 281.1, the base offense level may

be increased from 23 to as high as 36, depending on the

amount of money laundered. Under Section 281.2, the base

offense level may be increased from 17 to as high as 35,

17a

Appendix A

also depending on the amount laundered. The amount of

money involved thus plays an important role in determining

the offense level. Moreover, Percan’s money laundering

scheme was clearly “ongoing or continuous.” Because the

money laundering counts could therefore have been grouped

under Subsection (d),’ the district court’s decision to group

them under Subsection (b) was in my view harmless.‘

3. A recent decision, see United States v. Petrillo, 237 F.3d

119, 125 (2d Cir. 2000), includes dicta stating that “application of

subsection (d) to money laundering is prima facie inappropriate.”

However, that dicta occurred in the context of a discussion of our

conclusion in United States v. Napoli that counts of money

laundering and fraud should not be grouped under (d). Napoli held

that money laundering and fraud were not offenses of the “same

general type,” United States v. Napoli, 179 F.3d 1, 10 (2d Cir. 1999)

(quoting U.S.S.G. § 3D1.2, cmt. n.6), and therefore could not be

grouped under (d). In particular, Napoli concluded that the offenses

were different because the guidelines governing fraud measure the

amount of harm primarily based on the monetary loss, whereas the

guidelines governing money laundering set a much higher initial

base offense level, so that less of the total offense level for laundering

is based on the specific amount of money involved. See id. at 13

(“Because the guidelines for fraud and money laundering measure

different types of harms and measure them in different ways ...

[the] fraud and money laundering counts are not of the ‘same general

type’ and should not be grouped together under subsection (d).”);

see also id. at 10-12; cf. United States v. Fitzgerald, 232 F.3d 315,

319 (2d Cir. 2000) (interpreting Napoli and holding that tax evasion,

fraud, and conversion counts should be grouped under (d) since all

“measure the harm by reference to the amount of monetary loss”).

Napoli further emphasized Commentary language stating that

grouping is appropriate where “the offense guidelines . . . base the

offense level primarily on the amount of money or quantity of

substance involved,” U.S.S.G. ch. 3, pt. D, introductory cmt.;

(Cont’d)

18a

Appendix A

(Cont’d)

see Napoli, 179 F.3d at 10, and concluded that the money laundering

guideline does not meet this criterion, see id. at 10-11.

However, Napoli’s interpretation of Subsection (d) is not

relevant to the issue I am raising, namely, whether the multiple

money laundering counts themselves should have been grouped

under (d). Clearly, multiple counts concerning the same basic

offensive conduct are offenses of the “same general type.” Moreover,

as noted, money laundering is specifically listed as an offense

appropriate for grouping under Subsection (d). While being listed

under (d) may not be dispositive, see Napoli, 179 F.3d at 9 n.4

(holding listing under (d) “insufficient” to establish that counts

should be grouped), it certainly has weight. Further, the text of

Subsection (d) requires only that the “offense level is determined

largely on the basis of the total harm or loss.” U.S.S.G. § 3D1.2(d).

Under the guidelines covering the kind of laundering alleged here,

the base offense level may be increased by more than 50 percent,

depending on the amount laundered. See id. §§ 2S1.1, 2S1.2;

see, e.g., United States v. O'Kane, 155 F.3d 969, 974 (8th Cir. 1998)

(“[I]t is clear that several separate money laundering counts could

properly be grouped together under (d). . . .”).

The dicta in Petrillo says no more than that it may be “prima

facie inappropriate” to group money laundering counts with fraud

counts, not that it is presumptively inappropriate to group multiple

money laundering counts themselves.

4. It does not appear that the offense level in this case would

have changed had the fifteen money laundering counts been grouped

under (d) rather than (b). When grouping under (b), courts are

instructed to take as the offense level that of the “most serious of

the counts comprising the Group.” U.S.S.G. § 3D1.3(a). In Percan’s

case, the first money laundering count (count three of the indictment)

alleged the most harm, claiming that the defendants used between

(Cont'd)

19a

Appendix A

Accordingly, I concur in the result.

(Cont’d)

one and two million dollars in illegal proceeds to further the stolen-

goods scheme. The Guidelines section that covers money laundering

provides for a base offense level of 23 for promotion money-

laundering and for an increase in the offense level depending on the

amount laundered. See id. § 2S1.1. Under that Section, the base

offense level is increased by 5 where the amount laundered is

between one and two million dollars. See id. § 2S1.1(b)(2). Thus,

the Probation Office determined that the money laundering counts,

grouped under Subsection 3D1.2(b), had a total offense level of 28.

Had the counts instead been grouped under Subsection

3D1.2(d), “the offense level applicable to a Group is the offense

level corresponding to the aggregated quantity.” Jd. § 3D1.3(b).

“When the counts involve offenses of the same general type to which

different guidelines apply ... , apply the offense guideline that

produces the highest offense level.” Jd. In Percan’s case, the total

amount allegedly laundered was between one and two million

dollars, resulting in the same total offense level of 28 under Section

2S1.1, the “guideline that produces the highest offense level” in

this case. Thus, because using the aggregated quantity results in the

same total offense level in this case as does using the most serious

count, grouping the money laundering counts under Subsection (b),

while erroneous, does not affect the outcome.

20a

Appendix A

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

At a stated Term of the United States Court of Appeals

for the Second Circuit, held at the United States Courthouse

in the City of New York, Foley Square, on the 3™ day of

May, two thousand and one.

BEFORE: Hon. Ellsworth Van Graafeiland,

Hon. Ralph K. Winter,

Hon. Guido Calabresi,

Circuit Judges.

Docket No. 00-1232

UNITED STATES OF AMERICA,

Appellee,

V.

EILEEN KALUST, JOSE DIAZ, RADHAMES MELO, aka

“Radmes”, aka “Raymond”, aka “Radhmes”, aka “Melo”,

aka “Ernesto”, aka “Rhadames”, ELIAS ABREU, aka

“Albino”, aka “Roberto Abreu”, ALL IN ONE AUTO,

Defendants,

MAURIZIO PERCAN,

Defendants-Appellant

2la

Appendix A

Appeal from the United States District Court for the

Southern District of New York.

This cause came on to be heard on the transcript of record

from the United States District Court for the Southern District

of New York and was argued by counsel.

On consideration whereof, it is now hereby ORDERED,

ADJUDGED and DECREED that the judgment of said

district court be and it hereby is AFFIRMED in accordance

with the opinion of this Court.

. FOR THE COURT:

ROSEANN B. MACKECHNIE,

Clerk

by:

s/ Beth J. Meador

Beth J. Meador

Administrative Attorney

22a

APPENDIX B — JUDGMENT OF THE UNITED

STATES DISTRICT COURT FOR THE SOUTHERN

DISTRICT OF NEW YORK DATED MARCH 13, 2000

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

Case Number: 1:98 Cr. 00392-001(AGS)

UNITED STATES OF AMERICA

v.

MAURIZIO PERCAN

JUDGMENT IN A CRIMINAL CASE

(For Offenses Committed On or After November 1, 1987)

Joseph Tacopina, Esq.

Defendant’s Attorney

THE DEFENDANT:

{] was found guilty on Counts 1-17 after a plea of not

guilty.

23a

Appendix B

Title & Nature of Date Count

Section Offense Concluded Number(s)

18 USC Conspiracy to Trans- 5/4/98 ]

371 port Stolen Goods

18 USC Interstate Transporta- 5/4/98 2

2314 tion of Stolen Goods

18 USC Money Laundering 5/4/98 3

1956(h) Conspiracy

18 USC Money Laundering 1/31/98 4-11

1956(a)

(1)(A)@)

18 USC Money Laundering 10/16/96 12-17

1957(a)

The defendant is sentenced as provided in pages 2

through 7 of this judgment. The sentence is imposed

pursuant to the Sentencing Reform Act of 1984.

*x* * *

IT IS FURTHER ORDERED that the defendant shall

notify the United States Attorney for this district within

30 days of any change of name, residence, or mailing

address until all fines, restitution, costs, and special

assessments imposed by this judgment are fully paid.

24a

Appendix B

Defendant’s Soc. Sec. No.: March 10, 2000

120-68-2505 Date of Imposition of

Judgment

Defendant’s Date of Birth:

10/17/68

Defendant’s USM No.: s/ Allen G. Schwartz

86684-022 Signature of Judicial Officer

Defendant’s Residence ALLEN G. SCHWARTZ

Address: U.S. DISTRICT JUDGE

229 Stewart Avenue Name & Title of Judicial

Garden City, New York Officer

11530

Defendant’s Mailing 3/13/00

Address: Date

Same as Above

IMPRISONMENT

The defendant is hereby committed to the custody of

the United States Bureau of Prisons to be imprisoned for a

total of ONE HUNDRED AND EIGHT (108) MONTHS.

G) The court makes the following recommendations to the

Bureau of Prisons:

That the defendant participate in a substance abuse

program while incarcerated.

x* * *

25a

Appendix B

{) The defendant shall surrender to the United States

Marshal for this district:

&K) at 9:00 Kam. O p.m. on April 24, 2000

as notified by the United States Marshal.

* * *

SUPERVISED RELEASE

Upon release from imprisonment, the defendant shall be

on supervised release for a term of THREE (3) YEARS.

The defendant shall report to the probation office in

the district to which the defendant is released within

72 hours of release from the custody of the Bureau of

Prisons.

The defendant shall not commit another federal, state, or

local crime.

The defendant shall not illegally possess a controlled

substance.

For offenses committed on or after September 13, 1994:

The defendant shall refrain from any unlawful use of a

controlled substance. The defendant shall submit to one drug

test within 15 days of release from imprisonment and at

least two periodic drug tests thereafter, as directed by the

probation officer.

26a

Appendix B

{) The defendant shall not possess a firearm as defined in

18 U.S.C. § 921. (Check, if applicable.)

If this judgment imposes a fine or a restitution

obligation, it shall be a condition of supervised release

that the defendant pay any such fine or restitution that

remains unpaid at the commencement of the term of

supervised release in accordance with the Schedule of

Payments set forth in the Criminal Monetary Penalties

sheet of this judgment.

The defendant shall comply with the standard

conditions that have been adopted by this court (set forth

below). The defendant shall also comply with the additional

conditions on the attached page.

STANDARD CONDITIONS OF SUPERVISION

1) the defendant shall not leave the judicial district

without the permission of the court or probation officer;

2) the defendant shall report to the probation officer and

shall submit a truthful and complete written report

within the first five days of each month;

3) the defendant shall answer truthfully all inquiries by

the probation officer and follow the instructions of the

probation officer;

4) the defendant shall support his or her dependents and

meet other family responsibilities;

5)

6)

7)

8)

9)

10)

11)

12)

27a

Appendix B

the defendant shall work regularly at a lawful

occupation unless excused by the probation officer for

schooling, training, or other acceptable reasons;

the defendant shall notify the probation officer ten days

prior to any change in residence or employment;

the defendant shall refrain from excessive use of

alcohol;

the defendant shall not frequent places where

controlled substances are illegally sold, used,

distributed, or administered;

the defendant shall not associate with any persons

engaged in criminal activity, and shall not associate

with any person convicted of a felony unless granted

permission to do so by the probation officer;

the defendant shall permit a probation officer to visit

him or her at any time at home or elsewhere and shall

permit confiscation of any contraband observed in plain

view of the probation officer;

the defendant shall notify the probation officer within

seventy-two hours of being arrested or questioned by

a law enforcement officer;

the defendant shall not enter into any agreement to act

as an informer or a special agent of a law enforcement

agency without the permission of the court;

28a

Appendix B

13) as directed by the probation officer, the defendant shall

notify third parties of risks that may be occasioned by

the defendant’s criminal record or personal history or

characteristics, and shall permit the probation officer

to make such notifications and to confirm the

defendant’s compliance with such notification

requirement.

SPECIAL CONDITIONS OF SUPERVISION

1. The defendant shall provide the probation officer with

access to any requested financial information.

2. The defendant shall not incur new credit charges or open

additional lines of credit without the approval of the

probation officer unless the defendant is in compliance with

the installment payment schedule.

3. The defendant will participate in a program approved

by the U.S. Probation Office for substance abuse, which

program may include testing to determine whether the

defendant has reverted to the use of drugs or alcohol. The

defendant will be required to contribute to the costs of

services rendered (copayment) in an amount to be

determined by the probation officer, based on ability to pay

or availability of third-party payment.

4. The defendant is to report to the nearest probation office

within 72 hours of release from custody.

5. The defendant shall be supervised in the dist: .ct of his

residence.

29a

Appendix B

6. The defendant shall pay restitution in the amount of

$21,308.26 (joint and severally liable) to be paid in monthly

installments of 10% of gross monthly income over a period

of supervision to commence 30 days after release from

custody.

The defendant shall make restitution payments from any

wages he may earn in prison in accordance with the Bureau

of Prisons Financial Responsibility Program. Any portion

of the restitution that is not paid in full at the time of the

defendant’s release from imprisonment shall become a

condition of supervision.

7. The defendant shall notify the U.S. Attorney for this

district within 30 days of any change of mailing or residence

address that occurs while any portion of the restitution

remains unpaid.

CRIMINAL MONETARY PENALTIES

—

The defendant shall pay the following total criminal |

monetary penalties in accordance with the schedule of

payments set forth on Sheet 5, Part B.

Assessment Fine Restitution

Totals: $ 1,650 $ 0 $ 21,308.26 joint/

severally

30a

Appendix B

RESTITUTION

Bd * *

x The defendant shall make restitution to the following

payees in the amounts listed below.

If the defendant makes a partial payment, each payee

shall receive an approximately proportional payment unless

specified otherwise in the priority order or percentage

payment column below.

*Total Amount of Priority Order

Name Amount Restitution of Percentage

of Payee ofLoss Ordered of Payment

Ford-The American 12,544.26 12,544.25 1

Road Insurance

Company

National Claim

Center — Fairlane

Office Center

4 Parklane Blivd.,

Suite 460

Dearborn, MI 48126

Attn: Beverly

Hansler

* Findings for the total amount of losses are required under

Chapters 109A, 110, 110A, and 113A of Title 18 for offenses

committed on or after September 13, 1994 but before April 23,

1996.

3la

Appendix B

Philip Mostel 200.00 200.00 l

75-26 Bell Blvd.

Bayside, N.Y. 11364

Anthony Jameson 200.00 200.00 ]

205 W. Line Street

Hartford, AL 36344

Peter Thomson 500.00 500.00 1

7220 3rd Avenue

Brooklyn, N.Y.

11209

Wilson M. Morales 2,941.00 2,941.00 l

1085 Walton

Avenue, #25

Bronx, N.Y. 10452

Geico Direct 2,823.00 2,823.00 1

750 Woodbury Road

Woodbury, N.Y.

11797

Nationwide 2,100.00 2,100.00 1

Insurance

2643 Montgomery

Hwy, Ste. 2

Dothan, AL 36303

Totals: $21,308.26 $21,308.26

32a

Appendix B

[Sheet 5, Part B]

ADDITIONAL DEFENDANTS HELD

JOINT AND SEVERAL

Case Number

(Including Joint and Several

Defendant Number) Defendant Name Amount

98 Cr. 392-003 Jose Diaz 12,544.26

98 Cr. 392-005 Roberto Acosta 12,544.26

SCHEDULE OF PAYMENTS

Payments shall be applied in the following order:

(1) assessment; (2) restitution; (3) fine principal; (4) cost

of prosecution; (5) interest; (6) penalties.

Payment of the total fine and other criminal monetary

penalties shall be due as follows:

A &) in full immediately

* * *

The defendant will be credited for all payments previously

made toward any criminal monetary penalties imposed.

Special instructions regarding the payment of criminal

monetary penalties:

Restitution in the amount of $21,308.26 (joint and severally

liable) shall be paid in monthly installments of 10% of gross

33a

Appendix B

monthly income over a period of supervision to commence

30 days after the release from custody. The defendant shall

make restitution payments from any wages he may earn in

prison in accordance with the Bureau of Prisons Financial

Responsibility Program. Any portion of the restitution that

is not paid in full at the time of the defendant’s release from

imprisonment shall become a condition of supervision.

* * *

[J The defendant shall forfeit the defendant’s interest in

the following property to the United States:

Stipulation and Order of Forfeiture dated September

28, 1999. The amount of $775,000.00

Unless the court has expressly ordered otherwise in the

special instructions above, if this judgment imposes a period

of imprisonment, payment of criminal monetary penalties

shall be due during the period of imprisonment. All criminal

monetary penalty payments, except those payments made

through the Bureau of Prisons’ Inmate Financial

Responsibility Program, are to be made as directed by the

court, the probation officer, or the United States attorney.

STATEMENT OF REASONS

{ The court adopts the factual findings and guideline

application in the presentence report.

. = al

34a

Appendix B

Guideline Range Determined by the Court:

Total Offense Level: 30

Criminal History Category: 2

Imprisonment Range: 108 to 135 months

Supervised Release Range: 2 to 3 years

Fine Range: $ 17,500 to $ 4,500,000

Fine waived or below the guideline range because

of inability to pay.

Total Amount of Restitution: $ 21,308.26

. * *

{} The sentence is within the guideline range, that

range does not exceed 24 months, and the sentence

is imposed for the following reasons:

Seriousness of the crimes, deter this defendant and

others and to protect the public.

* * * *