U.S. v. Elfgeeh

• Citation: 515 F.3d 100
• Decision Date: 14 February 2008
• Docket Number: Docket No. 06-0638-cr(L). [Do] Docket No. 06-0744-cr(con).
• Parties: UNITED STATES of America, Appellee, v. Aref ELFGEEH and Abad Elfgeeh, Defendants-Appellants.
• Court: U.S. Court of Appeals — Second Circuit

515 F.3d 100

UNITED STATES of America, Appellee, v. Aref ELFGEEH and Abad Elfgeeh, Defendants-Appellants.

Docket No. 06-0638-cr(L). [Do] Docket No. 06-0744-cr(con).

United States Court of Appeals, Second Circuit.

Argued: April 26, 2007.

Decided: February 14, 2008.

Pamela K. Chen and Jeffrey H. Knox, Assistant United States Attorneys, Brooklyn, N.Y. (Roslynn R. Mauskopf, United States Attorney for the Eastern District of New York, Barbara D. Underwood, Counsel to the United States Attorney, David C. James, Assistant United States Attorney, Brooklyn, NY, on the brief), for Appellee.

Arthur S. Friedman, New York, NY, for Defendant-Appellant Aref Elfgeeh.

James M. Branden, New York, NY, for Defendant-Appellant Abad Elfgeeh.

Before: KEARSE and SACK, Circuit Judges, and MILLS, District Judge^*.

Judge SACK concurs in part and dissents in, part in a separate opinion.

KEARSE, Circuit Judge:

Defendants Aref Elfgeeh ("Aref") and Abad Elfgeeh ("Abad") (collectively the "Elfgeehs" or "defendants") appeal from judgments entered in the United States District Court for the Eastern District of New York following a jury trial before Sterling Johnson, Jr., Judge, convicting them of operating an unlicensed money-transmitting business, in violation of 18 U.S.C. § 1960(a), and conspiring to do so, in violation of 18 U.S.C. § 371; and convicting Abad of structuring financial transactions, in violation of 31 U.S.C. § 5324(a)(3). Aref was sentenced principally to 51 months' imprisonment, to be followed by a three-year term of supervised release, and was ordered to pay a $500,000 fine and to forfeit $22,435,467. Abad was sentenced principally to 188 months' imprisonment, to be followed by a three-year term of supervised release, and was ordered to pay a $1,250,000 fine and to forfeit $22,435,467. On appeal, defendants contend principally that they received an unfair trial due to newspaper publicity and trial testimony relating to terrorism and violence, and that the district court improperly instructed the jury on the mens rea element of the money-transmitting statute. Aref also contends that his postarrest statements were improperly admitted at trial. In addition, defendants challenge their sentences, contending, inter alia, that the prison terms imposed on them are unreasonable, both substantively and on various procedural grounds; and Abad contends that the amount of his fine is unreasonable. For the reasons that follow, we affirm the convictions and most aspects of the sentences, but we vacate and remand for reconsideration of the fine imposed on Abad and one of the sentencing enhancements applied to Aref.

I. BACKGROUND

The present prosecution arose out of the operation by Abad and his nephew Aref of a hawala, or money-transfer operation, at Abad's Carnival French Ice Cream (or "Carnival") shop in Brooklyn, New York. Abad was arrested in January 2003; an arrest warrant was issued for Aref, who was arrested in December of that year. In June 2004, the Elfgeehs were indicted on charges of operating an unlicensed money-transmitting business, in violation of 18 U.S.C. § 1960(a), and conspiring to do so, in violation of 18 U.S.C. § 371. As discussed in greater detail in Part II.D. below, § 1960 was amended in October 2001. Counts one and two of the indictment charged Abad with conspiring to violate, and violating, § 1960 prior to October 2001; counts three and four charged both Abad and Aref with conspiring to violate, and violating, the post-October 2001 version of that section. A subsequent superseding indictment added a charge (count five) that Abad had engaged in structuring monetary transactions from January 1995 to January 2003, in violation of 31 U.S.C. § 5324(a)(3). Section 5324(a)(3) provides that "[n]o person shall, for the purpose of evading the reporting requirements of section 5313(a) or 5325 or any regulation prescribed under any such section, ... structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions." The pertinent regulation under 31 U.S.C. § 5313(a) generally requires financial institutions, other than casinos, to file a report of any "deposit, withdrawal, exchange of currency or other payment or transfer, by, through, or to such financial institution which involves a transaction in currency of more than $10,000." 31 C.F.R. § 103.22(b)(1).

A. The Trial

1. The Government's Evidence of Unlicensed Money Transfers and Structuring

At trial, Special Agent Brian Murphy of the Federal Bureau of Investigation ("FBI") explained for the jury what a hawala is:

A Hawala operates in a similar fashion to a Western Union business. It's a money transfer operation. The word Hawala translated from Arabic into English means transfer . . . . [A] Hawala business is used to send money from one location to another.

(Trial Transcript ("Tr.") 223.) FBI Special Agent Daniel Gill described the benefits of using a hawala instead of using an official money-transmitting business such as Western Union:

One, it's conducted outside the realm of licensed banking activity. There is no regulatory oversight. Therefore, the transactions are basically conducted without any sort of legal review of how the transactions are conducted[.]

. . . .

A (Continuing) It also enables the transactions to occur without any review by banking officials that they are conducted in accordance with procedures and laws which govern banking activity.

. . . .

Q Are there any other advantages to the use of a hawala as opposed to licensed money transfer?

A The true originator of the funds and the true beneficiary of the funds are not identifiable in the banking transactions.

(Id. at 516-17; see also id. at 501(one of the advantages of such a system is that it "keeps the beneficiary and the originator of the transactions essentially anonymous in the transaction").)

The government's documentary evidence at trial, including several hundred exhibits, described and explained to the jury by Murphy, consisted in large part of account statements from a Carnival French Ice Cream account maintained by Abad at J.P. Morgan Chase Bank ("Chase"), as well as account statements from 12 "feeder" accounts at Chase and other banks. These statements showed large totals of money deposited into the Carnival account in small amounts as transfers from 12 feeder accounts, and large sums of money wired out of the Carnival account to accounts in 25 other countries. (See Tr. 234-36, 238-39, 242.) For example, in a one-month period during the fall of 2000, more than $245,000 was deposited into the Carnival account and more than $268,000 was wired out. (See id. at 234-36.) Between 1996 and 2003, the total amount deposited into the Carnival account was $22,190,642.21, and the total amount withdrawn was $21,995,556.54. (See id. at 239.)

Murphy described the overall flow of money in this case as follows:

[M]oney was deposited into these feeder accounts, these 12 different feeder accounts. After it was deposited, it was transferred to the JP Morgan Chase account and then after it reached the JP Morgan Chase account[it] was then wired out to one of these 20-plus countries, ultimately making its way back to Yemen.

(Tr. 245.) The money arrived in the feeder accounts by various means, including check deposits, cash deposits, and wire transfers. (See id.) Then,

[m]oney got from the feeder accounts to the Carnival account in generally one of two ways. Most often there were checks written . . . from one of the 12 feeder accounts, pay[able] to the order of Carnival French Ice Cream account and then it is deposited into the Carnival French Ice Cream account. On some occasions the feeder accounts would wire money over to the Carnival French Ice Cream account.

(Id. at 247.) Murphy testified that there were hundreds of checks from the feeder accounts made out to the Carnival account. (See id. at 249.)

The government also offered as evidence the account-opening documents for the feeder accounts, including another Chase bank account in the name of the Prospect Deli that was opened by Aref and listed the home address and telephone number of Abad. (See Tr. 258-60; see also id. at 268-69 (same account-opening information used for another feeder account at Astoria Federal Bank).) The Prospect Deli was a business a few blocks away from the Carnival French Ice Cream shop; the Prospect Deli was in operation only from 1996 to 1998, but activity in the Prospect Deli bank account continued until 2002. (See id. at 262-66.) For example, bank records showed that in 2001 approximately $850,000 was deposited into the Prospect Deli account and about $823,000 was transferred out to the Carnival account. (See id. at 266.)

A representative of the New York State Banking Department testified that neither Abad nor Aref, nor any of their various entities including Carnival French Ice Cream, had a New York State license to transmit money. (See Tr. 673-74.) The government offered evidence that Abad was aware of the licensing requirement. It introduced a letter from the New York State Banking Department dated March 2002, found in Abad's files, stating that a New York State license was required before commencement of money-transmitting activities. (See id. at 281-83.) An application form for such a license was attached to the letter but was not filled out. (See id. at 347.) In addition, Murphy testified that he had been informed by Abad's attorney that Abad was "told he needed to get a license to remit money and that he had to apply for it and that he never did apply for that." (Id. at 346.)

Murphy testified that after Aref was arrested in December 2003 and given Miranda warnings (Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966)) (see Part II.A. below), Murphy asked Aref about his involvement in the money-transmitting business.

Q What did he say?

A He stated that he worked for other people in a money...