U.S. v. Bush

• Decision Date: 03 December 2010
• Docket Number: No. 09-30131,09-30131
• Citation: 626 F.3d 527
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Charles Nolon BUSH, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

626 F.3d 527

UNITED STATES of America, Plaintiff-Appellee,

v.Charles Nolon BUSH, Defendant-Appellant.

No. 09-30131.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 4, 2010.

Filed Dec. 3, 2010.

Gregory Charles Link, Esq., Washington Appellate Project, Seattle, WA, for defendant-appellant Charles Nolon Bush.

Helen J. Brunner, Esq., Assistant United States Attorney; Arlen A. Storm, Esq., Assistant United States Attorney, Western District of Washington, Seattle, WA, for the appellee United States of America.

Appeal from the United States District Court for the Western District of Washington, Ronald B. Leighton, District Judge, Presiding. D.C. No. 3:06-cr-05504-RBL-1.

Before: SIDNEY R. THOMAS and MILAN D. SMITH, JR., Circuit Judges, and DAVID A. EZRA, District Judge.^*

OPINION

M. SMITH, Circuit Judge:

Defendant-Appellant Charles Nolon Bush appeals his conviction on twenty-seven of thirty-two counts charged in the Indictment. A jury convicted Bush of one count of securities fraud in violation 15 U.S.C. §§ 78j(b) and 78ff(a), eight counts of wire fraud in violation of 18 U.S.C. § 1343, three counts of mail fraud in violation of 18 U.S.C. § 1341, and fifteen counts of engaging in unlawful monetary transactions (transactional money laundering) in violation of 18 U.S.C. § 1957. Bush primarily contends that the government failed to prove that his money-laundering transactions involved the "profits" of criminal activities—a distinction he argues is necessary under the Supreme Court's decision in United States v. Santos, 553 U.S. 507, 128 S.Ct. 2020, 170 L.Ed.2d 912 (2008). Because Santos and its progeny dealt with money laundering under a different statute, 18 U.S.C. § 1956, Bush's argument that Santos applies to a Section 1957 transactional-money-laundering conviction is a matter of first impression for this court. Although we hold that Santos applies to Section 1957 convictions, it provides no relief to Bush because his money-laundering and fraud offenses do not "merge" as the crimes in Santos did. Accordingly, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

I. Bush's Investment Schemes

Bush's convictions arise from his creation and operation of three different "high-yield" investment programs in the western United States from 1997 until 2006. Over the course of what ultimately amounted to a four-year, $36 million Ponzi scheme, Bush lured approximately 400 victims into "investing" with him.

In 1997, after several years of marketing lackluster consumer products, Bush met real-estate developer Duane Christy, who was seeking financing to construct a luxury resort in Baja California to be known as Cabo San Quintin. Bush pledged that he could provide $800 million in financing to construct the resort. To raise this capital, Bush began promoting several high-yield investments to the public. Bush acquainted himself with other high-yield "promoters" by joining an organization called Global Prosperity. At various Global Prosperity workshops, Bush was introduced to other people involved in such schemes.

A. Hulaman Management Services

In early 1999, Bush paid unlicensed and self-proclaimed "ecclesiastical lawyer" Glen Stoll to start an ethereal legal entity known as a "corporation soul." Stoll filed articles of incorporation in Washington state for an entity called Director of the Cornerstone Institute (Cornerstone). Bush began promoting securities known as "mid-term notes" under one of Cornerstone's auxiliary branches, Hulaman Management Services (Hulaman). Bush told investors that these notes generated profits from favorable interest-rate movements and that investors could reap substantial gains in just over a month. According to his investors, Bush promised an eight- to nine-percent return per year as well as a high probability of a twenty-five-percent return every four to six weeks. Rather than structure the notes and manage the money himself, Bush told investors that he was a "facilitator for high-yield investments."

Using his contacts from Global Prosperity, Bush reinvested money given to him in two trading programs: IFR Trust, operated by Larry Wilcoxson of California, and Mintus, Inc., operated by Carolyn Mintus of New York. At his trial, Bush explained his understanding of Mintus's program into which he was placing investors' money:

Well, just the—that they made these tranches. These trades were down, and they bought and sold paper. I hear it called "mid-term bank note." I don't know what it is. Quite frankly I'm not a financier.

In addition to a return on his investments, Mintus offered Bush an $800 million guarantee for his planned investment in Cabo San Quintin.

Although Bush testified that he made no promises about the returns he could provide and that his trading programs were based on his "best efforts," his clients testified that he represented the investments as risk-free. He claimed the principal would remain in the investors' own accounts and was secured by real estate or promissory notes. Further, literature distributed by Bush indicated that his investment had minimal risk and could produce up to a 300-percent yearly return. According to a letter soliciting new investments, investor funds would be held "in trust" until the pool accumulated $1 million. At that point, the pooled funds would be transferred to Wilcoxson or Mintus who would then place the money with a "private merchant bank." After investors sent money, Bush sent them a Hulaman Trust International Trust and Fiduciary Agreement, which catalogued investors' funds under the reassuring heading "Assets Delivered in Trust." Soon after Bush began to invest with Mintus, she failed to make her first payment due to Bush. Despite this, Bush testified that he remained confident about the viability of Mintus's program and continued to place Hulaman-client money with her.

Bush recruited several individuals to assist him in promoting Hulaman. Chief among them was his longtime marketing partner Marilyn March. Bush also tapped Larry and Vicki Webster to work as "financial planners" and promoters, paying them a percentage of any funds they raised. Bush hired March's friend Tammy Stuckey to work as his administrative assistant. She was paid $1000 per week in cash. For his part, Bush told investors that he lived an ascetic life and "was merely a conduit for charity," using his profits from the trading program to fund his own charity, the From the Heart Foundation (Foundation).

Beginning in February 1999, and despite not receiving dividends from Mintus, Bush directed Stuckey to prepare and send client account statements to Hulaman investors showing balance increases of approximately twenty-five percent per month. Bush also began paying some investors twenty-five percent returns on their initial investments.

In July 1999, Bush and March purchased a property in Washington state known as View Park Golf Estate (View Park). Priced at $1.8 million, this 20-acre property included an 8,300 square-foot home, a golf course, tennis and basketball courts, and a fishing pond. Bush used funds from Hulaman's bank account to make the $250,000 down payment on View Park and pay the $10,000 per month mortgage. Bush and March used the home as a residence and meeting place for Hulaman investors and Foundation contributors. Bush hired groundskeepers, a chef, a masseuse, and a personal staff for View Park. In the summer of 1999, Bush hired new staff, including a personal secretary, to whom he paid a $125,000 salary into anoffshore bank account. After several employees objected to being paid exclusively in cash, Bush began paying them through Kelly Temporary Services.

Using Hulaman money, Bush also entered into leases with the Seattle Mariners baseball team and Seattle Seahawks football team for luxury suites at their respective stadiums. Bush invited prospective investors to join him in the suites for various sporting events.

B. Global Dominion Financial Services

In August 1999, the Federal Bureau of Investigation (FBI) began probing Wilcoxson and Mintus, executing search warrants to gather evidence about their offerings of mid-term notes. One month later, Bush informed his investors that Hulaman had moved its operations to the Caribbean island-nation of Nevis and was now operating under the moniker Global Dominion Financial Services (Global Dominion). Under Global Dominion, Bush promoted "high-yield" investments in "international financial institutions." Again promising an eight-percent annual return, with sporadic twenty-five-percent interest payments, Bush asked investors to wire transfer him money at the Bank Crozier in Grenada or to send money to his associate Nigel Grant, an attorney in Coronado, California. Bush told investors that a $1350 payment to Grant was necessary to establish the Nevis L.L.C., which would hold their money. Bush transferred all Hulaman files to Grant's law office in Coronado. After Bush's personal secretary traveled to Coronado to organize the files, Grant began sending account statements from his law office to Global Dominion investors.

Grant began posting investor account statements on Global Dominion's new website. For the first eight-week "trading period" under Global Dominion's watch, client statements showed a twenty-five percent return on investment. As was the case with Hulaman, neither Bush nor his associates at Global Dominion were reaping substantial returns from their investments in Mintus and Wilcoxson. Indeed, of the $12.3 million Bush claims to have invested with Wilcoxson and Mintus from both Hulaman and Global Dominion, Bush received back a pittance of $53,000. Nevertheless, Global Dominion continued to post new earnings to client account statements.

On October 28, 1999, Bush received a letter from the Washington State Department of Financial Institutions (DFI) which questioned the legality of his operations. Bush sought counsel from Stoll, his unlicensed "attorney." Stoll sent a letter on Bush's behalf to the DFI denying that...