U.S. v. Connell

• Decision Date: 07 January 1992
• Docket Number: No. 91-1700,91-1700
• Parties: UNITED STATES of America, Appellee, v. Gerald CONNELL, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 191

960 F.2d 191

UNITED STATES of America, Appellee, v. Gerald CONNELL, Defendant, Appellant.

No. 91-1700.

United States Court of Appeals,

First Circuit.

Heard Jan. 7, 1992.

Decided Feb. 26, 1992.

William A. Dimitri, Jr., with whom Dimitri & Dimitri was on brief, for defendant, appellant.

Margaret E. Curran, Asst. U.S. Atty., with whom Lincoln C. Almond, U.S. Atty., and Craig N. Moore, Asst. U.S. Atty., were on brief, for the U.S.

Before TORRUELLA, ALDRICH and SELYA, Circuit Judges.

SELYA, Circuit Judge.

This appeal, in which the appellant complains that the government practiced "sentencing entrapment," calls upon us to venture onto terra incognita. Believing, as we do, that the district court did not err in accepting the fruits of the government's activities, we turn a deaf ear to the appellant's complaint. We also overrule his objection to a "special skill" adjustment made by the lower court in constructing the guideline sentencing range (GSR). Withal, an intervening change in the law leads us to remand the matter for reconsideration of the sentence originally imposed.

I. BACKGROUND

Defendant-appellant Gerald Connell pled guilty to a single count charging that he structured financial transactions for the purpose of evading federal currency reporting requirements in violation of 31 U.S.C. § 5324 (1988). The trial judge fixed the GSR at twenty-seven/thirty-three months (offense level 18/criminal history category I) and, on June 26, 1991, sentenced Connell to a thirty month prison term. ¹ Because the conviction stemmed from a guilty plea, we draw the facts from the transcript of the sentencing hearing and the presentence investigation report (PSI Report). See United States v. Garcia, 954 F.2d 12, 14 (1st Cir.1992).

The appellant was a stockbroker with the firm of Barrett & Company, Middletown, Rhode Island. In the spring of 1989, a Newport-area attorney introduced him to "Bill Ross." Although Ross held himself out to be a financial consultant and "front man" for anonymous persons desirous of laundering money, he was a counterfeit bill. In reality, Ross was an agent of the Internal Revenue Service (IRS), bent on investigating money laundering activities in Rhode Island. After a series of preliminary meetings, Connell began to launder money at Ross's behest.

The scheme worked this way. Connell opened a series of bank accounts in his own name at various banking institutions and established a money market account (the MMA) in Ross's name at Barrett & Company. Knowing that federal law required financial institutions to file currency transaction reports (CTRs) with the IRS for all cash transactions in excess of $10,000, see 31 C.F.R. § 103.22 (1990), Connell took cash from Ross, divided it into increments of less than $10,000, and spread the smaller increments among the bank accounts that he had opened. Connell eventually withdrew the money from the accounts, again in amounts under $10,000, and deposited the funds into the MMA. He also purchased stock in his own name, for Ross's benefit. No CTRs were filed for any of these myriad money shuffles.

Appellant did Ross's bidding on four separate occasions. He accepted $16,000 in cash on June 21, 1989; $25,000 on June 29; $15,000 on July 20; and, finally, $25,000 on March 21, 1990. Appellant's motivation seems to have been the gossamer prospect of playing a part in future business deals involving Ross and Ross's principals. In any event, he declined Ross's offer of a set fee for services rendered.

Throughout his conversations with Ross, Connell indicated an awareness that structuring cash transactions to avoid filing CTRs was a violation of federal law. ² Connell was not, however, aggressively inquisitive as to the origin of the funds. During their first meeting, Ross told Connell that the money was coming from an elaborate gambling operation in Atlantic City (whether legal or illegal, Ross did not specify). On three occasions in early 1990, Ross told Connell that he was laundering money derived from the illegal drug trade. All the relevant conversations were tape-recorded.

II. CRIMINALLY DERIVED PROPERTY

Appellant's first assignment of error involves the district court's decision to adjust the offense level upward under U.S.S.G. § 2S1.3(b)(1) (calling for a five-level increase in cases where "the defendant knew or believed that [laundered] funds were criminally derived property"). ³ Notwithstanding the apparent fit between the guideline and the circumstances of the case, appellant argues that the sentencing court should not have applied the five-level enhancement because of the way in which the drug trafficking motif was interjected into the money laundering scheme. We review the sentencing court's factbound determinations in respect to U.S.S.G. § 2S1.3 only for clear error. See United States v. Kotoch, 954 F.2d 340, 341 (6th Cir.1992); United States v. Hassan, 927 F.2d 303, 309 (7th Cir.1991); United States v. Ortiz Barrera, 922 F.2d 664, 666 (11th Cir.1991) (per curiam).

A.

Appellant does not contest the legitimacy of the sting operation per se. Rather, his opposition to the five-level enhancement is built upon the claim that Ross gratuitously spun a yarn about the illicit origin of the funds for the sole purpose of guaranteeing that appellant's punishment would be increased. The appellant describes this conduct as "sentencing entrapment." In the relatively brief period since the advent of the federal sentencing guidelines, we have not had the occasion to analyze a comparable claim. ⁴

To be sure, appellant acknowledges that government-supplied funds, produced in the course of a sting operation, can trigger the five-level enhancement. See U.S.S.G. § 2S1.3, comment. (n.2). But in this case, he contends that the vice lay in the timing: by broaching the subject of the currency's supposed origin (drug trafficking) only after Connell had fully completed three episodes of money laundering, the undercover agent forced (or lured) him into actions he would otherwise have eschewed, i.e., peripheral participation in the narcotics trade. This Machiavellian scenario, Connell adds, was orchestrated for the sole purpose of boosting the sentence he would ultimately receive. In mounting this attack, appellant relies heavily upon two cases which, while affirming sentences imposed by district judges, mention in dicta that a creature such as "sentencing entrapment" might be roaming loose in the guidelines jungle and, under certain unspecified circumstances, might warrant a downward departure from the GSR. See United States v. Lenfesty, 923 F.2d 1293, 1300 (8th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 1602, 113 L.Ed.2d 665 (1991); United States v. Stuart, 923 F.2d 607, 614 (8th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 1599, 113 L.Ed.2d 662 --- U.S. ----, 112 S.Ct. 145, 116 L.Ed.2d 111 (1991).

As a preliminary matter, we prefer to dismiss the inexact, albeit catchy, label that Connell uses. By his guilty plea, appellant freely admitted that he was predisposed to structure cash transactions. Hence, there was no basis for an entrapment defense on the merits. See United States v. Rodriguez, 858 F.2d 809, 812 (1st Cir.1988) (defendant must make a showing of lack of predisposition in order to prevail on an entrapment defense). While it is problematic whether the appellant was predisposed to do business with drug dealers, his predisposition to engage in illegal currency transactions makes the use of the term "sentencing entrapment" both inapposite and misleading. His complaint, at bottom, is that the government practiced what might more accurately be called "sentencing factor manipulation."

By definition, there is an element of manipulation in any sting operation. The question presented here presupposes as much. It requires us to consider whether the manipulation inherent in a sting operation, even if insufficiently oppressive to support an entrapment defense, see, e.g., Rodriguez, 858 F.2d at 812-15 (outlining elements of entrapment defense), or due process claim, see, e.g., United States v. Panitz, 907 F.2d 1267, 1272-73 (1st Cir.1990) (outlining theoretical underpinnings of premise that government's active participation in a criminal venture may go so far as to offend due process), must sometimes be filtered out of the sentencing calculus. So framed, the question brings to mind much that has been written and stated about the opportunities that the sentencing guidelines pose for prosecutors to gerrymander the district courts' sentencing options and thus, defendants' sentences. See, e.g., G. Heaney, The Reality of Guidelines Sentencing, 28 Am.Crim.L.Rev. 161, 195-96 (1991); S. Glickman & S. Salky, Criminal Defense in the Era of Sentencing Guidelines, 150 P.L.I.Crim. 807 (1989). It is unsurprising, therefore, that challenges to the manipulative powers available to prosecutors and investigators under the sentencing guidelines have arisen in a rich variety of situations. See, e.g., United States v. Richardson, 925 F.2d 112 (5th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 2868, 115 L.Ed.2d 1034 (1991); ⁵ United States v. Dickey, 924 F.2d 836 (9th Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 383, 116 L.Ed.2d 334 (1991); ⁶ Lenfesty, supra, 923 F.2d 1293; Stuart, supra, 923 F.2d 607.

At first blush, this case seems to present the problem in bold relief. But on close perscrutation of the record, appellant's argument, whatever its theoretical possibilities may portend for other cases, falters on an inadequate factual foundation. Assuming, arguendo, that prior to February of 1990, Connell did not know the funds were criminally derived, ⁷ there is no doubt that he was clearly on notice thereafter. On February 28, 1990, Ross told Connell that he was "going to have cash coming in ... [that] is not very clean money. It's narcotics money." Connell inquired as to the wellspring of Ross's knowledge. Ross replied that his boss had mistakenly given him a valise containing ...