309 F.3d 566 (9th Cir. 2002), 01-30081, U.S. v. Booth

Docket Nº:01-30081
Citation:309 F.3d 566
Party Name:U.S. v. Booth
Case Date:October 25, 2002
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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309 F.3d 566 (9th Cir. 2002)

UNITED STATES of America, Plaintiff-Appellee,


Michael David BOOTH, Defendant-Appellant.

United States of America, Plaintiff-Appellee,


Louis Robert Bories, Defendant-Appellant.

United States of America, Plaintiff-Appellee


Michael David Booth, Defendant-Appellant.

Nos. 01-30081, 01-30086, 01-30105.

United States Court of Appeals, Ninth Circuit

October 25, 2002

Argued and Submitted Feb. 5, 2002.

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Jeffry K. Finer, Finer & Pugsley, P.S.; Gerald R. Smith, Federal Defenders of Eastern Washington and Idaho; Spokane, WA, for appellants.

Thomas O. Rice, Assistant United States Attorney, Spokane, WA, for appellee.

Appeal from the United States District Court for the Eastern District of Washington; Edward F. Shea, District Judge, Presiding. D.C. No. CR-99-00018-EFS, D.C. No. CR-99-00019-EFS, D.C. No. CR-99-000156-EFS.

Before CANBY, JR., KLEINFELD, and McKEOWN,[*] Circuit Judges.


CANBY, Senior Judge.

Louis Bories and Michael Booth were convicted of wire fraud, 18 U.S.C. § 1343, and Booth was also convicted of money laundering, 18 U.S.C. § 1956. Both now appeal, challenging the sufficiency of the evidence as well as a variety of the district court's evidentiary rulings and sentencing determinations.1 We affirm both defendants' convictions and the district court's evidentiary rulings. We also affirm Bories' sentence. We vacate Booth's sentence and remand for resentencing, however, because Booth was not given sufficient notice of the grounds that the district court relied upon for an upward departure in his sentence.

Facts and Procedural Background

Booth and Bories began working for LeasX, Inc. ("LeasX") in mid-1997. At that time, LeasX was apparently a legitimate business, offering brokering and discounting services to businesses seeking to lease durable equipment. LeasX would find investors willing to buy the desired equipment and lease it to LeasX's clients. Shortly after Booth and Bories joined the organization, the owners of LeasX sold their interests to Booth. As owner, Booth was effectively in charge of the operation; his nominal position, however, was that of director, and Bories was president. LeasX also had ten other employees.

Between December 1997 and January 1999, the date of indictment, LeasX contracted with five companies, several of whom were in financial difficulties, to find them a total of some $393.3 million in financing, sometimes promising funding within one or two days. LeasX found funding for only one lease of $100,000 during this period. LeasX received advance fees totaling nearly $2 million. Although the advance fees were represented to be refundable if a satisfactory funding source was not secured, Booth and Bories spent the fees as they came in, on salaries for employees and for their own personal expenses, including, among other things, the rental of a jet airplane, automobile leases, jewelry, trips to Las Vegas, and golf lessons.

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The money was spent in numerous cash or check transactions.

The only money that was ever returned to a client was $5,000 out of an advance fee of $96,036. Although Booth was clearly the leader of the fraudulent operation, Bories was substantially involved as well, making promises to clients and signing documents in connection with the scheme.

At trial, both defendants acknowledged LeasX's dismal record of finding financing for the clients and conceded that they had spent the advanced fees they received. Booth argued that there was no fraudulent intent; instead, he had simply made bad business decisions and the business had failed. Bories's defense was that, whatever Booth's intent, Bories did not intend to defraud and did not realize that Booth was doing so.

The jury found both defendants guilty of some of the fraud charges, but acquitted them on others. Booth was convicted of money laundering charges as well. Both defendants were acquitted of conspiracy. At sentencing, the district court adjusted Booth's offense level upward four levels for his role as an "organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive." United States Sentencing Guidelines ("U.S.S.G.") § 3B1.1(a). The court adjusted Bories' offense level upward by two levels for his role as "leader, manager, or supervisor in any criminal activity." U.S.S.G. § 3B1.1(c). The district court also imposed an upward departure of two levels on Booth for preying on desperate clients and betraying their hopes, and causing emotional impact and harm to the victims which Booth had reason to foresee.


I. Trial Issues

Money Laundering Instruction

Booth contends that the indictment and instructions on the money laundering charges were flawed in that they permitted conviction if the jury found that the money laundering transactions were intended either to conceal the sources of money or to promote an illegal scheme. We reject this contention.2

Booth's argument focuses on two clauses of the money laundering statute, which we italicize:

§ 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

* * * *

(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 . . . .

18 U.S.C. § 1956(a)(1)(A)(i) and (B)(ii).

It is apparent from the disjunctive "or" in the above statute that the crime may be committed with either of the two specified states of mind. Booth's indictment, however, did not plead the two states of mind disjunctively; it alleged conjunctively that Booth conducted the unlawful financial transactions "with the intent

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to promote the carrying on of the specified unlawful activity and knowing that the transaction was designed . . . to conceal and disguise" the proceeds. (Emphasis added). When Booth's case was submitted to the jury, the instructions reverted to the disjunctive form: the jury was permitted to convict if it found that Booth had conducted the money laundering transactions either with the intent to promote the unlawful activity or knowing that the transactions were designed to conceal.

There was no reversible error in this sequence of events. When a statute specifies two or more ways in which an offense may be committed, all may be alleged in the conjunctive in one count and proof of any one of those conjunctively charged acts may establish guilt. United States v. Urrutia, 897 F.2d 430, 432 (9th Cir. 1990); United States v. Bettencourt, 614 F.2d 214, 219 (9th Cir. 1980) ("[A] jury may convict on a finding of any of the elements of a disjunctively defined offense, despite the grand jury's choice of conjunctive language in the indictment."); see also United States v. Miller, 471 U.S. 130, 134-38, 105 S.Ct. 1811, 85 L.Ed.2d 99 (1985) (no fatal variance when jury convicts on proof of only one of several means of committing crime that were alleged in the indictment, so long as indictment gave clear notice of charges to be defended against).

Booth argues that the money laundering statute sets forth two distinct crimes, not merely two means of committing one crime. Nothing in the words or structure of § 1956 supports that argument, however. Booth relies on the Seventh Circuit's decision in United States v. Jackson, 935 F.2d 832 (7th Cir. 1991), which observed that the two subsections dealing with state of mind "are aimed at different activities"—plowing back unlawful proceeds to promote the illegal activity, and hiding the proceeds of that activity. Id. at 842. But in Jackson the jury instruction under which the defendants were convicted was in the conjunctive; it required the jury to find both an intent to promote the activity and a knowing purpose of concealment. The Seventh Circuit noted that the instruction was erroneous:

The statute, however, only requires proof of one or the other. The fact that the government imposed an additional burden on itself does not warrant a reversal.

Id. at 842. Our circuit was later faced with the same situation, and we cited Jackson for the proposition that, by offering a conjunctive instruction on money laundering, the government had merely imposed an additional (but unnecessary) burden on itself. United States v. Savage, 67 F.3d 1435, 1440 (9th Cir. 1995).

Booth is similarly not aided by United States v. Gaddis, 424 U.S. 544, 96 S.Ct. 1023, 47 L.Ed.2d 222 (1976). Gaddis is merely one of a series of cases holding that one may not be charged, convicted and punished for two closely-related crimes set forth in the same statute, when Congress clearly did not intend that result. Accordingly, a defendant who robbed a bank could not be convicted both of the robbery, and of receiving the proceeds of the robbery; Congress was aiming at two different kinds of actors in that statutory scheme—those who rob, and those who receive proceeds from those who rob. See id. at 547-48, 96 S.Ct. 1023; see also United States v. Oropeza, 564 F.2d 316, 323 (9th Cir. 1977) (a person cannot be convicted of distribution and possession of the same narcotics); United States v. Ortiz-Martinez, 557 F.2d 214, 216 (9th Cir. 1977) (a person cannot be convicted of both illegal entry and illegal re entry after deportation, when both charges stem from a single entry). Booth's case is quite distinguishable

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from Gaddis and its progeny; Booth faces...

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