U.S. v. Adefehinti

• Decision Date: 18 December 2007
• Docket Number: No. 04-3080.,No. 05-3055.,No. 05-3046.,04-3080.,05-3046.,05-3055.
• Citation: U.S. v. Adefehinti, 510 F.3d 319, 379 U.S. App. D.C. 91 (D.C. Cir. 2007)
• Parties: UNITED STATES of America, Appellee v. Sunday Yemi ADEFEHINTI, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

510 F.3d 319

UNITED STATES of America, Appellee v. Sunday Yemi ADEFEHINTI, Appellant.

No. 04-3080.

No. 05-3046.

No. 05-3055.

United States Court of Appeals, District of Columbia Circuit.

Argued October 12, 2007.

Decided December 18, 2007.

Appeals from the United States District Court for the District of Columbia, (Nos.01cr00451-01, 01cr00451-02, 01cr00451-04).

Charles B. Wayne, appointed by the court, argued the cause and filed the brief for appellant Sunday Yemi Adefehinti.

Sandra G. Roland, Assistant Federal Public Defender, argued the cause for appellant Tayo John Bode. With her on the briefs was A.J. Kramer, Federal Public Defender. Neil H. Jaffee and Shawn Moore, Assistant Federal Public Defenders, entered appearances.

Michael Alan Olshonsky, appointed by the court, argued the cause and filed the brief for appellant Olushola Akinleye.

Ellen R. Meltzer, Attorney, U.S. Department of Justice, argued the cause for appellee. With her on the brief was Jeffrey A. Taylor, U.S. Attorney.

Before: GRIFFITH and EDWARDS, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge WILLIAMS.

WILLIAMS, Senior Circuit Judge:

Five defendants — appellants Adefehinti, Akinleye, and Bode, and two others (Akinkuowo and Protech Builders) — were tried together for a variety of crimes arising out of a scam by which they contrived to secure mortgages on items of real property at vastly inflated values. The three appellants were convicted on counts of racketeering, in violation of 18 U.S.C. § 1962(c); bank fraud, in violation of 18 U.S.C. § 1344; and interstate transportation of stolen property, in violation of 18 U.S.C. § 2314. Adefehinti and Bode were also convicted of money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i). The district court sentenced Adefehinti to 74 months in prison, Akinleye to 37 months, and Bode to 57 months.

Adefehinti, Akinleye, and Bode attack their convictions on multiple grounds. Adefehinti also challenges his sentence. The only claims meriting discussion in a published opinion are (1) Bode's contention that the evidence was insufficient to convict him of intending to conceal funds, an essential element of the money laundering charge, and (2) appellants' claim that the circumstances under which loan documents were admitted into evidence compromised their rights under the Confrontation Clause of the Sixth Amendment. We reverse Bode's money laundering conviction but otherwise affirm the judgments in all respects.

* * *

Between 1995 and 1999, defendants defrauded banks of millions of dollars through real estate and mortgage transactions involving properties in Washington, D.C. The scheme consisted of a series of fraudulently executed land "flips": defendants bought cheap properties with fake identities and then sold them to each other for artificially high prices, using bank loans to fund the purchase. Defendants fabricated the identity of buyers, providing the straw buyers with false employment histories, financial records, and addresses. In some cases, the buyers had the names of real individuals, but defendants doctored their employment or financial histories so that they would qualify for more substantial loans; occasionally, defendants would sign the name of a real person without his knowledge. At defendants' behest, appraisers lied about the properties' value, inflating the listing price.

The schemers submitted the fraudulent loan applications to banks, which relied on them in making lending decisions. On the issuance of loan checks to the straw buyers, the defendants distributed the proceeds among themselves. The non-existent or unqualified buyers naturally failed to make mortgage payments, which eventually led the banks to foreclose.

Adefehinti, owner of W.H.V. Realty, served as the real estate broker and orchestrated many facets of the scheme. Akinleye owned Protech, a company at which some of the straw buyers falsely claimed to work, and signed a variety of loan documents in other people's names. Bode, a co-owner and officer of Protech, played various roles, helping to fabricate the straw buyers' financial and employment records and facilitating the purchase and sale of properties.

* * *

Bode's money laundering conviction under 18 U.S.C. § 1956(a)(1)(B)(i) turned on his role in allocating the proceeds from the fraudulent sale of a property located at 137 Adams Street, N.W. Bode argues that the prosecution failed to offer sufficient evidence of a crucial element of such a conviction, namely that he intended to conceal the funds in question. In reality, he says, the transactions amount to no more than divvying up the joint venture's gains, albeit illegally obtained. We agree.

To convict a person for money laundering under 18 U.S.C. § 1956(a)(1)(B)(i), the government must prove that (1) the defendant conducted or attempted to conduct a financial transaction; (2) the transaction involved the proceeds of unlawful activity; (3) the defendant knew that the proceeds were from unlawful activity; and (4) the defendant knew "that the transaction [was] 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)(B)(i); see also United States v. Majors, 196 F.3d 1206, 1212 (11th Cir.1999). Bode claims that the government failed to prove the fourth element of the offense, namely that he attempted to "conceal or disguise" the fraudulently obtained funds.

The basis of Bode's money laundering conviction was the disposition of a settlement check for $41,010, which was payable to "Mohamed Massaqudi," an evidently fictional seller. The lower left-hand corner of the check stated that the check was "for proceeds of settlement of 137 Adams St." See GX 234. The check was endorsed in Massaqudi's name to Bernard Adeola of Image Construction, with a notation of the account number of W.H.V. Realty, Adefehinti's real estate company, and was negotiated at NationsBank. Immediately thereafter, $8000 was deposited into Bode's account at NationsBank, $16,340 into W.H.V. Realty's account there, $8010 into an unrelated account there, and $7000 was received as cash. Adefehinti then wrote checks to Akinkuowo on his W.H.V. Realty account for a total of $7000 (one for $3000 immediately after the transaction, another for $4000 a few days later).

The government contends that a reasonable jury could conclude that these transactions, originating with a check made payable to a fictitious individual, were part of a scheme to conceal the fact that these funds were the proceeds of fraudulently obtained bank loans. As usual, we review the evidence in the light most favorable to the government. United States v. Carson, 455 F.3d 336, 368-69 (D.C.Cir.2006).

The money laundering statute criminalizes behavior that masks the relationship between an individual and his illegally obtained proceeds; it has no application to the transparent division or deposit of those proceeds. "In its classic form, the money launderer folds ill-gotten funds into the receipts of a legitimate business." United States v. Esterman, 324 F.3d 565, 570 (7th Cir.2003). Section 1956, enacted as part of the Money Laundering Control Act of 1986, punishes those who "inject [] illegal proceeds into the stream of commerce while obfuscating their source." United States v. Wynn, 61 F.3d 921, 926 (D.C.Cir.1995).

It seems clear that, as the Seventh Circuit has observed, the necessary intent to conceal requires "something more" than the mere transfer of unlawfully obtained funds, though that "`something more' is hard to articulate." Esterman, 324 F.3d at 572. Rather, "subsequent transactions must be specifically designed to hide the provenance of the funds involved." United States v. Jackson, 935 F.2d 832, 843 (7th Cir.1991). Esterman noted that cases in which courts have upheld money laundering convictions "have in common the existence of more than one transaction, coupled with either direct evidence of intent to conceal or sufficiently complex transactions that such an intent could be inferred." 324 F.3d at 572. The court's list of cases that have found laundering is instructive:

Cases concluding that the line has been crossed into the "money laundering" territory include United States v. Thayer, 204 F.3d 1352, 1354-55 (11th Cir.2000) (funneling illegal funds through various fictitious business accounts); United States v. Majors, 196 F.3d 1206, 1212-13 (11th Cir.1999) ("elaborate shell game" involving multiple inter-company transfers with a variety of signatory names); United States v. Willey, 57 F.3d 1374, 1387 (5th Cir.1995) ("highly unusual" transactions involving cashier's checks, third party deposits, and trust accounts used to disguise source of funds); United States v. Garcia-Emanuel, 14 F.3d 1469, 1476-79 (10th Cir.1994) (land purchased in name of restaurant to make it appear that business was source of wealth and truck purchased in wife's name for stated purpose of deceiving IRS); United States v. Campbell, 977 F.2d 854, 858 n. 4 (4th Cir.1992) (reduction in price for sale of house combined with under-the-table payment); United States v. Beddow, 957 F.2d 1330, 1334-35 (6th Cir.1992) (use of "front man" and "convoluted financial dealings" to invest in emeralds and a charter boat, designed to disguise ownership and evade transaction reporting requirements); United States v. Lovett, 964 F.2d 1029, 1033-37 (10th Cir.1992) (convoluted financial transactions leading up to purchase of house, combined with misleading statements regarding nature and source of purchase money).

324 F.3d at 572. At the other end of the spectrum are "typically simple transactions that can be followed with relative ease, or transactions that involve nothing but the initial crime." Id.; see also United States v. Olaniyi-Oke, 199 F.3d 767, 770-71 (5th Cir.1999).

The transactions in this matter...