Wednesday, October 23, 2013

Undisguised Transfers from Operating Accounts to Investment Accounts Not Proof of Concealment of Money Laundering or “Sophisticated Means” for § 2B1.1(b)(9)(C)

United States v. Valdez, No. 12-50027 (Aug. 12, 2013) (Higginbotham, Owen, Graves)

Valdez, a psychiatrist, appealed many aspects of his trial and sentence in his money laundering and health care fraud case.  For the money laundering charge, 18 U.S.C. § 1956(a)(1), the Government alleged the two alternative ways to violate that statute: to promote or further illegal actions, and to conceal or disguise the nature or source of the illegal proceeds.  The panel found there was insufficient evidence of money laundering by concealment but sufficient evidence to sustain the conviction based on promotion of unlawful activity. 
The prove money laundering by concealment, the government relied on Valdez’s transfers of funds from operating accounts to investment accounts and on his property purchases.  All transfers and purchases were done openly in Valdez’s name.  “None of the transactions pointed to by the government show a specific intent to conceal the nature, location, source or ownership of the funds used.  Valdez did not use false names, third parties, or any particularly complicated financial maneuvers, which are usual hallmarks of an intent to conceal.”
Nonetheless, the conviction stands because there was sufficient evidence that Valdez made irregular payments and “loans” to his employees with the fraudulently-obtained money satisfying the promotion prong of money laundering.  The district court did not give the jury a specific unanimity charge regarding the money laundering count, which would have instructed them to unanimously agree that Valdez was guilty of money laundering based on promotion, concealment, or both.  Valdez, however, did not object to the instruction, and panel held that Fifth Circuit precedent forecloses Valdez’s argument that this constituted plain error.  See United States v. Alford, 999 F.2d 818, 824 (5th Cir. 1993).
As for Valdez’s sentencing arguments, the panel found that Valdez’s transfers from operating accounts to investment accounts did not constitute “sophisticated means” to conceal the offense under U.S.S.G. § 2B1.1(b)(9)(C).  The panel also found that the district court erred by calculating the intended loss based on the value of the fraudulent claims filed without considering Valdez’s evidence in the record that he never expected full reimbursement for the fraudulent claims filed.   Despite these errors, the panel found that the 300-month sentence was within the adjusted Guidelines range and that the district court would have imposed that sentence regardless of the adjusted range.  The errors were harmless.  The panel also affirmed the abuse of trust enhancement under § 3B1.3, the mass-marketing enhancement under § 2B1.1(b)(2)(A)(ii), and the application of the vulnerable victims enhancement under § 3A1.1(b)(1) since there was sufficient evidence that some patients were harmed by Valdez’s conduct. 

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