U.S. v. Dela Espriella

Decision Date10 February 1986
Docket NumberNos. 84-5252,s. 84-5252
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Antoinette DELA ESPRIELLA, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Margaret CARO, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Alberto DELA ESPRIELLA, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Pablo CHAPOY, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Gustavo RICARDO RONDEROS, Defendant-Appellant. to 85-5255, and 84-5298.
CourtU.S. Court of Appeals — Ninth Circuit

Brian Sun, Asst. U.S. Atty., Los Angeles, Cal., for plaintiff-appellee.

Phillip G. Trad, Marina Del Rey, Cal., for Antoinette Dela Espriella.

Marlene Gerdts, Glendale, Cal., for Caro.

Joseph F. Walsh, Esq., Los Angeles, Cal., for Alberto Dela Espriella.

Stephen R. Kahn, Los Angeles, Cal., for Chapoy.

Joseph T. Vodnoy, Los Angeles, Cal., for Ronderos.

Consolidated Appeals from the United States District Court for the Central District of California.

Before SKOPIL and CANBY, Circuit Judges, and SOLOMON, Senior District Judge. *

CANBY, Circuit Judge:

These consolidated appeals challenge convictions resulting from a scheme to launder funds derived from narcotics transactions. Following return of a 19-count indictment, appellants Antoinette Espriella, Margaret Caro, Alberto Espriella and Pablo Chapoy each entered conditional guilty pleas to one count of conspiracy to violate the currency reporting laws and to defraud the government, in violation of 18 U.S.C. Sec. 371 and 31 U.S.C. Secs. 5313, 5322, and one count of fraudulent concealment of material facts from the Internal Revenue Service (IRS) relating to the filing of Currency Transaction Reports (CTR's), in violation of 18 U.S.C. Sec. 1001.

Appellant Ronderos also conditionally pled guilty to one count of violating 18 U.S.C. Sec. 1001 (Count Ten). In addition, he entered conditional guilty pleas to one count of conspiracy to aid and abet the possession and distribution of cocaine, in violation of 18 U.S.C. Sec. 2 and 21 U.S.C. Sec. 846 (Count One), and one count of causing a financial institution not to file CTR's, in violation of 18 U.S.C. Sec. 2 and 31 U.S.C. Secs. 5313, 5322 (Count Seven). Finally, based on stipulated facts, the district court found Ronderos guilty of one count of operating a currency exchange business that failed to file CTR's, again in violation of 18 U.S.C. Sec. 2 and 31 U.S.C. Secs. 5313, 5322 (Count Six). 1

Appellants entered their pleas while preserving for appeal their contention that the indictment failed to allege a crime under 31 U.S.C. Secs. 5313, 5322. We agree and therefore reverse the convictions as to all appellants except Ronderos. We reverse Ronderos' convictions on Counts Seven and Ten, and we affirm his convictions on Counts One and Six.

BACKGROUND

The indictment charged that, between 1982 and 1984, appellants were involved in a scheme to convert millions of dollars in U.S. currency derived from cocaine trafficking into negotiable instruments such as cashier's checks. Ronderos, as apparent kingpin of this money-laundering operation, employed the other appellants as "runners," who each day carried large sums of currency to various banks and converted the cash into cashier's checks or other negotiable instruments. Under 31 U.S.C. Sec. 5313, 2 financial institutions must file CTR's with the IRS for every currency transaction in excess of $10,000.

To avoid the reporting requirement, Ronderos instructed his runners to purchase cashier's checks for less than $10,000 each. Runners would often convert more than $100,000 in a given day, with transactions at as many as nineteen different banking locations.

DISCUSSION
I. Currency Reporting Act Charges

Appellants contend that Section 5313 does not proscribe intentional transaction restructuring of the sort engaged in here and that the indictment, therefore, did not allege a crime. We review de novo the legal sufficiency of an indictment. United States v. Buckley, 689 F.2d 893, 897 (9th Cir.1982), cert. denied, 460 U.S. 1086, 103 S.Ct. 1778, 76 L.Ed.2d 349 (1983).

The precise question at issue was recently considered by this court in United States v. Varbel, 780 F.2d 758 (9th Cir.1986). There, we held that the plain language of Section 5313 and accompanying regulations made clear that CTR's were required only of financial institutions and only when the currency transaction involved $10,000 or more. Id. at 762; accord United States v. Anzalone, 766 F.2d 676, 681-83 (1st Cir.1985). We also held that, because the individual transactions involved were perfectly legal, there could be no violation of 18 U.S.C. Sec. 2 (aiding or abetting a violation of Sec. 5313) or 18 U.S.C. Sec. 1001 (fraudulent concealment of material fact concerning a transaction within the jurisdiction of a federal government agency). Varbel, At 762-63. We think it equally clear from Varbel that, where each currency transactions involves less than $10,000, there can be no conspiracy, under 18 U.S.C. Sec. 371, to violate Section 5313.

On the authority of the Varbel decision, we reverse all of the convictions of all appellants except Ronderos. In Ronderos' case, we reverse his convictions on Counts Seven and Ten of the indictment.

II. Remaining Counts Against Ronderos

We still must consider Ronderos' convictions on Counts One and Six. He challenges

these convictions on several grounds.

A. Laundering Funds as Aiding and Abetting

Ronderos first argues that an act of money laundering that occurs after the commission of a narcotics offense may not result in prosecution of the launderer as an aider and abettor of the narcotics offense. He therefore believes his conviction for conspiracy under Count One must also be reversed. We disagree.

It is today well settled that a person can be liable for conspiracy because he provides a central service to a criminal venture. See, e.g., United States v. Batimana, 623 F.2d 1366, 1368 (9th Cir.) (defendants acted as lookouts), cert. denied, 449 U.S. 1038, 101 S.Ct. 617, 66 L.Ed.2d 500 (1980); United States v. Haro-Espinosa, 619 F.2d 789, 794 (9th Cir.1979) (defendant rented motel room and lent co-conspirator his car). Several courts have addressed laundering of illicit narcotics proceeds directly and have concluded that such activities may be integral to the success of a narcotics conspiracy. See, e.g., United States v. Orozco-Prada, 732 F.2d 1076, 1080 (2d Cir.), cert. denied, --- U.S. ----, 105 S.Ct. 154, 8 L.Ed.2d 92 (1984); United States v. Metz, 608 F.2d 147, 153 (5th Cir.1979), cert. denied, 449 U.S. 821, 101 S.Ct. 80, 66 L.Ed.2d 24 (1980); United States v. Barnes, 604 F.2d 121, 163 (2d Cir.1979), cert. denied, 446 U.S. 907, 100 S.Ct. 1833, 64 L.Ed.2d 260 (1980).

Of course, money laundering itself is not a crime, and the mere fact that a person launders monies derived from narcotics activities does not make the launderer part of a conspiracy to violate the narcotics laws. The government must show a "sufficient link" between a defendant's money laundering and the underlying drug transaction to demonstrate that defendant was a member of the conspiracy. Orozco-Prada, 732 F.2d at 1081. In his brief before this court, Ronderos concedes that his money laundering services facilitated the movement of drug profits out of the country. By his guilty plea, Ronderos basically affirmed the government's allegation that his laundering activities occurred in concert with the underlying drug trafficking. We therefore reject Ronderos' contention.

B. Ronderos' Status as a Financial Institution

Ronderos also challenges his conviction on Count Six. He claims that, as a matter of law, he is not a financial institution for purposes of 31 U.S.C. Sec. 5313 and so he is not subject to the CTR filing requirement. Again, we must disagree.

The term "financial institution" is defined both by statute and regulation. Under 31 U.S.C. Sec. 5312(a)(2), the term includes various traditional financial entities, such as banks and brokerages. The statute's 21 sub-subsections make clear, however, that the term "financial institution" is to be given a broad definition. Indeed, 31 U.S.C. Sec. 5312(a)(2)(U) states that "financial institution" is to include any "business or agency carrying out a similar, related, or substitute duty or power the Secretary of the Treasury prescribes."

The Secretary's regulations are also quite broad, including in the definition of "financial institution" any person "who engages as a business in dealing in or exchanging currency as, for example, a dealer in foreign exchange or a person engaged primarily in the cashing of checks." 31 C.F.R. Sec. 103.11 (1984). These definitions are consistent with Congress' intent to create a "sweeping law enforcement tool for locating, inter alia, large transfers, in currency, of the proceeds of unlawful transactions." United States v. Goldberg, 756 F.2d 949, 954 (2d Cir.), cert. denied, --- U.S. ----, 105 S.Ct. 2706, 86 L.Ed.2d 721 (1985); see also H.R.Rep. No. 91-975, 91st Cong., 2d Sess. 11-12, reprinted in 1970 U.S. Code Cong. & Ad. News 4394, 4396-97. As the Supreme Court has stated, "Congress recognized the importance of reports of large and unusual currency transactions in ferreting out criminal activity and desired to strengthen the statutory basis for requiring such reports." California Bankers Assoc. v. Shultz, 416 U.S. 21, 38, 94 S.Ct. 1494, 1506, 39 L.E.2d 812 (1974).

The Goldberg court recently addressed the very questions presented here; and it concluded, after a thorough review of the legislative history, that the definitions in 31 C.F.R. Sec. 103.11 and 31 U.S.C. Sec. 5312(a)(2) were sufficiently broad to include launderers within the term "financial institution" as that term is used in 31 U.S.C. Sec. 5313. See Goldberg, 756 F.2d at 953-56. We find that reasoning persuasive and hold that Ronderos could be a...

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