U.S. v. Edwards

• Citation: 111 F.Supp.2d 1057
• Decision Date: 07 August 2000
• Docket Number: No. 99-CR-168.,99-CR-168.
• Parties: UNITED STATES of America, Plaintiff, v. Terri Denise EDWARDS, et al., Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

111 F.Supp.2d 1057

UNITED STATES of America, Plaintiff, v. Terri Denise EDWARDS, et al., Defendant.

No. 99-CR-168.

United States District Court, E.D. Wisconsin.

August 7, 2000.

COPYRIGHT MATERIAL OMITTED

Gail Hoffman, Asst. U.S. Atty., Milwaukee, WI, for U.S.

John T. Wasielewski, Milwaukee, WI, for defendant.

DECISION AND ORDER

ADELMAN, District Judge.

Defendant Terri Denise Edwards challenges the sufficiency of count 4 of the superseding indictment for failure to assert an essential element of the crime. Count 4 charges Edwards with money laundering in violation of 18 U.S.C. §§ 1956(a)(1)(B)(i) and 2.¹ The indictment accuses Edwards only of "conduct[ing] a financial transaction," in language recited from § 1956(a)(1). However, the indictment fails to allege that the transaction satisfied § 1956's definition of "financial transaction," which requires that the transaction affect interstate commerce. See § 1956(c)(4).

Magistrate Judge Callahan considered Edwards's motion and on March 15, 2000 issued both a recommendation that count 4 not be dismissed, and an order that the government specify which portions of § 1956(c)(4) the government intended to prove the transaction satisfied. (Docket # 196 at 42-47.) Edwards filed timely objections to the recommendation, and the government filed a response. I review the recommendation de novo. See 28 U.S.C. § 636(b)(1)(B).

I. FACTUAL BACKGROUND

Edwards is one of sixteen defendants named in the nine-count superseding indictment. The text of count 4 is as follows:

COUNT FOUR

THE GRAND JURY FURTHER CHARGES:

From on or about April 8, 1996, through April 24, 1996, in the Eastern District of Wisconsin,

TERRI DENISE EDWARDS [aliases omitted]; ZACHARY ORR

[aliases omitted]; CHARLES L. HORTMAN [aliases omitted], the defendants herein, conducted a financial transaction which, in fact, involved the proceeds of specified unlawful activity in the dealing of narcotics or other dangerous drugs, to wit, cocaine.... The financial transaction which Terri Edwards, Zachary Orr and Charles Hortman caused to be made was the payment of approximately $64,909.00 in U.S. currency to a Milwaukee, Wisconsin law firm.

All in violation of Title 18, United States Code, Sections 1956(a)(1)(B)(i) and 2.

The language at issue is taken directly from § 1956(a)(1), which refers to a suspect who "conducts or attempts to conduct ... a financial transaction which in fact involves the proceeds of specified unlawful activity."

For purposes of money laundering under § 1956, "financial transaction" is defined as:

(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.

18 U.S.C. § 1956(c)(4).

Count 7 of the superseding indictment accuses Edwards of participating, on or about December 20, 1996, in "a financial transaction in or affecting interstate commerce." Like count 4, this count is a money laundering count and alleges that the money involved in the transaction was proceeds from the sale of cocaine; unlike count 4, it does not specify what the transaction was.

II. LEGAL STANDARD

The Fifth Amendment guarantees that "[n]o person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury." U.S. Const. amend. V. The indictment must charge fully and clearly each element of the crime charged. See Jones v. United States, 526 U.S. 227, 232, 119 S.Ct. 1215, 143 L.Ed.2d 311 (1999); Almendarez-Torres v. United States, 523 U.S. 224, 228, 118 S.Ct. 1219, 140 L.Ed.2d 350 (1998); United States v. Miller, 471 U.S. 130, 136, 105 S.Ct. 1811, 85 L.Ed.2d 99 (1985); Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 41 L.Ed.2d 590 (1974).² The indictment must be "a plain, concise and definite written statement of the essential facts constituting the offense charged." Fed.R.Crim.P. 7(c)(1). The grand jury's role is to determine whether there is probable cause to believe a crime has been committed and to protect citizens against unfounded criminal prosecutions. See United States v. Calandra, 414 U.S. 338, 343, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974). An indictment returned by a legally constituted and unbiased grand jury, if valid on its face, is all that the Fifth Amendment requires; the court will not second-guess whether the grand jury had sufficient evidence. See Costello v. United States, 350 U.S. 359, 363, 76 S.Ct. 406, 100 L.Ed. 397 (1956).

A defendant may object at any time during the pendency of the proceedings that the indictment fails to charge an offense. See Fed.R.Crim.P. 12(b)(2). Nonetheless, tardily challenged indictments are construed liberally in favor of validity. See United States v. Watkins, 709 F.2d 475, 478 n. 2 (7th Cir.1983) (citing United States v. Pheaster, 544 F.2d 353 (9th Cir.1976)).

The government contends that all indictments are presumed to be valid. It relies upon a case brought in this district in which the court, although concerned about the quality and quantity of consideration that the grand jury could have given to an 82-page indictment during the time that it deliberated, nonetheless refused to dismiss the indictment, on the grounds that an indictment is presumed to be valid on its face and that there is a strong presumption of regularity in all grand jury proceedings. See United States v. Van Engel, 809 F.Supp. 1360, 1366 (E.D.Wis.1992) (Evans, C.J.), rev'd on other grounds, 15 F.3d 623 (7th Cir.1993).

The government's argument misconceives the roles of grand jury and judge. Van Engel merely indicates that a grand jury's completing its deliberations quickly, perhaps even hastily, does not override the presumption that it lawfully fulfilled its responsibilities. The Supreme Court decision cited by then-Chief Judge Evans confirms the deference that is due to the grand jury's deliberations over whether to issue an indictment; the sufficiency of the grand jury's evidence and proceedings may not be reviewed "if [the indictment is] valid on its face." Costello, 350 U.S. at 363, 76 S.Ct. 406 (emphasis added), cited in Van Engel, 809 F.Supp. at 1366.

But an allegation that the indictment fails to charge all elements of the crime is not an allegation of irregularities in the grand jury's proceedings. "[W]hether the attempt of the draftsman for the Grand Jury in Mississippi has been successful [is tested by whether] the indictments charge offenses against the various defendants which may be prosecuted under the designated federal statutes." United States v. Price, 383 U.S. 787, 791, 86 S.Ct. 1152, 16 L.Ed.2d 267 (1966). Whether an indictment successfully charges a federal offense is a question of law. The grand jury's draftsman is typically a prosecutor, not a member of the grand jury. To require judges to presume that indictments allege all elements of the crimes that they charge would require judges to defer to prosecutors on questions of law regarding defendants' rights under the Constitution. I therefore reject the government's suggestion. I apply a de novo, rather than deferential, review of whether the indictment fully and clearly states each element of the crime charged.

III. DISCUSSION

The first question is whether affecting interstate commerce is an element of money laundering under 18 U.S.C. § 1956. The Seventh Circuit has summarized the elements of money laundering under § 1956 in this way:

To convict a defendant on a money laundering count, the government is required to demonstrate that the defendant (1) conducted a financial transaction affecting interstate commerce with property representing the proceeds of some illegal activity; (2) knew the property represented illegal proceeds; and (3) conducted the transaction with the intent of promoting the unlawful activity.

United States v. Masten, 170 F.3d 790, 797 (7th Cir.1999) (citing United States v. Emerson, 128 F.3d 557, 561 (7th Cir.1997)). If there is no interstate commerce there is no federal jurisdiction. "Because Congress prohibited money laundering only when the individual financial transaction at issue affects interstate or foreign commerce, proof of a nexus with interstate or foreign commerce is an essential element of the crime of money laundering." United States v. Goodwin, 141 F.3d 394, 401 (2nd Cir.1997); accord, United States v. Heater, 63 F.3d 311, 318 (4th Cir.1995); United States v. Grey, 56 F.3d 1219, 1224 (10th Cir.1995).

The magistrate judge's recommendation noted that the Seventh Circuit's pattern jury instruction for § 1956(a)(1)(B)(i) uses the term "financial transaction" but does not refer to an effect on interstate commerce. (Recomm. at 44). The recommendation reasoned that because the jury would need to be instructed at trial, and would need to determine whether, beyond a reasonable doubt, the transaction had an effect on interstate commerce, it would necessarily need to determine whether Edwards had engaged in a "financial transaction" as defined in § 1956; but that because the pattern instruction for § 1956(a)(1)(B)(i) does not define "financial transaction" as having an effect on interstate commerce, such an effect is not an element of the offense. (Recomm. at 45.)

To be sure, every element of the crime must be presented to the jury and proven beyond a reasonable doubt, see Jones, 526 U.S. at 232, 119 S.Ct. 1215, but this requirement is in addition to the indictment's including every element, not instead of it, see id. The Seventh Circuit's pattern jury instructions for money laundering do provide detailed instructions for individual subsections of § 1956, including § 1956(a)(1)(B)(i), but they also separately define...