169 F.3d 798 (3rd Cir. 1999), 96-5144, United States v. Morelli

Docket Nº:in No. 96-5144.
Citation:169 F.3d 798
Party Name:UNITED STATES of America, v. MORELLI, Anthony, (D.C. Crim. No. 93-cr-00210-1), Appellant
Case Date:March 09, 1999
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

Page 798

169 F.3d 798 (3rd Cir. 1999)



MORELLI, Anthony, (D.C. Crim. No. 93-cr-00210-1), Appellant

in No. 96-5144.

United States of America,


Igor Roizman, a/k/a Little Igor, (D.C. Crim. No.

93-cr-00210-10), Igor Roizman Appellant in No. 96-5389.

Nos. 96-5144, 96-5389.

United States Court of Appeals, Third Circuit

March 9, 1999

Argued June 5, 1997.

Reargued Sept. 8, 1998.

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[Copyrighted Material Omitted]

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Judd Burstein (Argued), Marc Fernich, Burstein & Fass LLP, New York, N.Y., for Appellant Igor Roizman.

Michael S. Vogel, Allegaert, Berger & Vogel LLP, New York, N.Y., Nicholas A. Gravante, Jr. (Argued), Barrett, Gravante, Carpinello & Stern LLP, New York, N.Y., Richard A. Rehbock, Law Office of Richard A. Rehbock, Jericho, N.Y., for Appellant Anthony Morelli.

Faith S. Hochberg, United States Attorney, George S. Leone, Assistant United States Attorney, Elizabeth S. Ferguson (Argued), Assistant United States Attorney, Newark, NJ, for Appellee United States of America.

Before: BECKER, Chief Judge, SCIRICA, Circuit Judge, and KELLY, District Judge. [*]


BECKER, Chief Judge.

These appeals by defendants Anthony Morelli and Igor Roizman from judgments in a criminal case raise two issues of criminal law and procedure. Morelli's appeal centers on the interpretation of the federal money laundering statute, 18 U.S.C. § 1956, in the context of wire fraud. Roizman's appeal involves the question of ineffective assistance of counsel where the defendant's attorney faces a possible conflict of interest.

The scheme in which Morelli and Roizman were involved engaged in a series of transactions that resulted in the embezzlement of excise taxes from fuel sales. Each series included a number of wire transfers, each of which occurred after the money involved came into the possession of those who controlled the scheme. At trial, the government proved only that specific transfers had occurred before the point at which the taxes should have been collected for transmittal to the government. Morelli argues that these series of transactions did not constitute money laundering.

He claims initially that the government failed to prove that any of the transactions involved proceeds of fraud, since the government offered no proof of wire transfers occurring after the point at which the taxes should have been collected. He contends that the money did not become the proceeds of fraud until after it should have been collected for the government but was not. We reject this conclusion because we believe that the money became the proceeds of fraud as soon as it entered the hands of members of the scheme. Alternatively, Morelli submits that the money was not the proceeds of wire fraud because the money came into the possession of the scheme as a result of fraud before any of the wirings involving the money occurred. But he ignores the fact that the scheme succeeded as a result of each and every wiring within each and every series of transactions. Accordingly, the money within each series of transactions was the proceeds of wire fraud because the fraud from which it resulted was promoted by the wire transfers within the preceding series of transactions.

Morelli also contends that the District Court erred in not granting him a downward departure from the money laundering guideline, U.S.S.G. § 2S1.1, because his conduct did not fall within the "heartland" of money laundering. We disagree, and dispose of this contention summarily in note 13 infra.

Roizman's appeal alleges that his attorney provided inadequate assistance because of a

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conflict of interest. Roizman's attorney represented both him and an individual whose statements were introduced at trial as hearsay evidence against him. Roizman first argues that his lawyer's conduct was deficient since he faced an actual conflict of interest to the extent that his ability to impeach the witness's hearsay statements conflicted with his duties to the witness as his client. The District Court rejected this claim because it found that impeachment of the witness was not a "plausible alternative defense strategy" for Roizman. Because we agree with the District Court's conclusion, and because such impeachment would not have adversely affected the witness's interests, we reject Roizman's argument.

Roizman also contends that his conviction should be reversed on a potential conflict-of-interest theory. He claims that the prosecutor, as well as his own attorney, knew of the conflict his attorney faced and, thus, violated his constitutional rights by not bringing it to the attention of the District Court. We can only grant a reversal for a potential conflict of interest, however, if the District Court itself was or should have been aware of the conflict and failed to address it. Since Roizman does not contend that the District Court should have been aware of the conflict, we reject his claim. We will therefore affirm the judgments of the District Court.

I. Procedural History

Morelli, Roizman and a number of coconspirators participated in a "daisy chain" scheme to evade excise taxes on the sale of certain kinds of fuel. The elements of such schemes have been detailed sufficiently elsewhere. See, e.g., United States v. Sertich, 95 F.3d 520, 522 (7th Cir.1996), cert. denied, 519 U.S. 1113, 117 S.Ct. 952, 136 L.Ed.2d 840 (1997); United States v. Veksler, 62 F.3d 544, 547 (3d Cir.1995); United States v. Macchia, 35 F.3d 662, 665-66 (2d Cir.1994); United States v. Victoria-21, 3 F.3d 571, 573 (2d Cir.1993); In re Assets of Martin, 1 F.3d 1351, 1353 (3d Cir.1993); United States v. Tarricone, 996 F.2d 1414, 1416-17 (2d Cir.1993); United States v. Aracri, 968 F.2d 1512, 1514-17 (2d Cir.1992); United States v. Musacchia, 900 F.2d 493, 495-96 (2d Cir.1990), vacated, 955 F.2d 3 (2d Cir.1991). We will set forth any relevant facts in our discussion of particular substantive issues.

As a result of their activities, Morelli and Roizman were charged in a forty four-count indictment, tried, and convicted of some of the counts. Several other coconspirators pleaded guilty at different times. Morelli was convicted of a RICO conspiracy, racketeering, an extortion conspiracy, extortion, mail fraud, and general conspiracy. With respect to the RICO conspiracy, the jury found that the government had proven money laundering as one of many predicate acts. With respect to the general conspiracy conviction, the jury found that one of the objects of the conspiracy, among others, was money laundering. Morelli was not named in any of the racketeering acts alleging money laundering. However, he was sentenced under the money laundering guideline, which provided the highest offense level. He received a three-point enhancement because he acted as a manager or supervisor of the money laundering conspiracy. The District Court then departed downward three levels, finding that the value of the funds laundered detailed in the Presentence Investigation Report overrepresented the crime. Morelli was sentenced to 240 months in prison. Roizman was convicted of RICO conspiracy, mail fraud, and extortion, and was sentenced to 90 months in prison. These timely appeals followed. 1

In addition to the arguments outlined in the introduction, the defendants each make a number of arguments that are patently without merit; hence we identify them and dispose of them summarily in the margin. Morelli contends that the District Court erred in applying his Role in the Offense adjustment to all of his offense groupings for sentencing purposes. 2 He also claims that he should not

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have been convicted of RICO conspiracy because he did not commit or agree to commit two predicate acts. 3 Finally, Morelli insists that his Sixth Amendment right to counsel was violated because two cooperating witnesses, Dougherty and Zummo, had previously participated in a joint defense agreement. 4 Roizman adopts by reference those of Morelli's claims that are relevant to him. 5

Following the initial oral argument in this case in June of 1997, we placed it in abeyance pending the Supreme Court's decision in Salinas v. United States, 522 U.S. 52, 118 S.Ct. 469, 139 L.Ed.2d 352 (1997). See supra note 3; see also United States v. Morelli, Order, Nos. 96-5144 & 96-5389 (3d Cir. June 23, 1997). In the meantime, we remanded certain issues to the District Court for further factual findings. The Supreme Court has now decided Salinas, see supra note 3, and the District Court has certified its findings on the issues to which we directed its attention, see supra note 4 & infra Part III. Accordingly, the appeal is now ripe for decision.

II. Morelli's Appeal

  1. Preservation of Issue for Review

    We first take up Morelli's argument that the District Court erred in calculating his sentence based primarily on the money laundering guideline, U.S.S.G. § 2S1.1. He contends that, as a matter of law, the facts do not support the conclusion that money laundering occurred. Although Morelli frames this submission as a challenge to his sentence, it is in actuality a sufficiency of the evidence argument. Morelli did not raise this in a Rule 29 motion, which would ordinarily be required of a sufficiency claim. See United States v. Powell, 113 F.3d 464, 466-67 (3d Cir.1997) ("If a defendant fails to file a timely motion for judgment of acquittal, we review sufficiency of evidence for plain error." (citing United States v. Gaydos, 108 F.3d 505, 509 (3d Cir.1997))), cert. denied, --- U.S. ----, 118 S.Ct. 454, 139 L.Ed. 389 (1997). Nevertheless we find that it is properly before us on the conventional direct appeal standard of review because of the unusual procedural posture, i.e., that this issue is only...

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