U.S. v. Goulding, s. 92-3616

• Decision Date: 20 June 1994
• Docket Number: 92-3630,Nos. 92-3616,s. 92-3616
• Citation: 26 F.3d 656
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Randall S. GOULDING and Michael M. Ushijima, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 656

26 F.3d 656

UNITED STATES of America, Plaintiff-Appellee, v. Randall S. GOULDING and Michael M. Ushijima, Defendants-Appellants.

Nos. 92-3616, 92-3630.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 17, 1994.

Decided May 25, 1994.

Rehearing and Suggestions for Rehearing En Banc Denied June

20, 1994.

John F. Podliska, Asst. U.S. Atty. (argued), Deborah A. Devaney, Office of U.S. Atty., Criminal Div., Chicago, IL, Barry R. Elden, Asst. U.S. Atty., Office of U.S. Atty., Criminal Receiving, Appellate Div., Chicago, IL, for U.S.

Joshua Sachs (argued), Chicago, IL, for Randall S. Goulding.

Robert G. Mackey, Chicago, IL, Lawrence J. Fleming, St. Louis, MO, for National Ass'n of Criminal Defense Lawyers amicus curiae.

Richard H. Parsons, Peoria, IL, Daniel G. O'Day, Cusack & Fleming, Peoria, IL, for Illinois Attys. for Criminal Justice amicus curiae.

Wayne B. Giampietro (argued), Witwer, Burlage, Poltrock & Giampietro, Chicago, IL, for Michael M. Ushijima.

Before CUMMINGS, KANNE and ROVNER, Circuit Judges.

CUMMINGS, Circuit Judge.

Randall S. Goulding and Michael M. Ushijima, both Illinois lawyers, were charged in an 18-count indictment with conspiracy to defraud the United States, mail fraud and illegal transportation of currency and monetary instruments in violation of 18 U.S.C. Secs. 371 and 1341 and 31 U.S.C. Secs. 5316(a) and 5322(a). A jury found them guilty on all counts. They were each sentenced to six months' incarceration on Count 1 and five years' probation on Counts 2 through 18. Both defendants were ordered to make restitution of $8,000 to the United States and to perform 500 hours of community service.

I. Facts

In late 1984 or early 1985, Goulding told government informant James Evegelatos that he knew how to move money around the world to hide it from the government in order to avoid paying taxes. Goulding claimed to have bankers in Hong Kong, Switzerland and the Cayman Islands, all of whom were acquainted with his system. Evegelatos reported the conversation to the government in September 1986 and an undercover investigation was commenced.

From December 1986 until August 1987, Internal Revenue Service Special Agent Gregory Myre using the name T.J. Ryder posed as a businessman who had, over the four previous years, acquired $400,000 in illegal income from bookmaking activity in Florida. Ryder was introduced to Goulding by Evegelatos in December 1986.

At their initial meeting Ryder informed Goulding that he wished to have use of his income without reporting it to the Internal Revenue Service. Goulding told Ryder that if Ryder declared his unreported income, the taxes, penalties and interest might eat up the entire unreported amount. Goulding explained, however, that for $10,000 he could arrange for Ryder's money to be moved through a corporate account in the Cayman Islands and brought back to the United States as a non-taxable corporate loan. Goulding drew a flow chart to depict the system. He acknowledged that Ryder would be in a lot of trouble if anyone found out about the system, but reassured Ryder that the system could be set up so that the Internal Revenue Service would not detect it. Goulding claimed his system "cleaned the money."

In February 1987, Ryder met with Goulding again. Ryder again explained that his unreported cash income came from illegal bookmaking activities. In response, Goulding described Cayman Islands' secrecy laws and explained how, given such laws, corporations and trusts could be established that could hide Ryder's transactions. Goulding again used a chart to explain his system, noting that the trusts could be controlled by Ryder through "wish letters" of instruction from Ryder to a trustee in the Cayman Islands. Goulding offered to travel there with Ryder to introduce him to lawyers, bankers and trust officers.

Ryder, however, told Goulding that he would prefer to transact business by mail and telephone. Goulding warned Ryder of international wire taps that might be involved and that international mail might be opened by the Internal Revenue Service and others. Ryder nonetheless insisted that he would not go to the Caymans (IRS policy prohibited agents from travelling outside the United States), but made clear that he was willing to pay Goulding to take his money there. Goulding claimed not to have available couriers, despite his contacts in the Caymans, and indicated that a second person would need to be enlisted in the scheme. He suggested his associate co-defendant Ushijima, who he claimed had worked with him before on such "international tax matters."

Later in February 1987, Ryder met with Goulding at the O'Hare Hilton Hotel in Chicago and was introduced to Ushijima. Ryder told Ushijima that he had cash income that had not been reported on his tax returns. Ushijima described his system of trusts and corporations to be set up in the United States and Cayman Islands to move the money. He said that a management company in the Caymans would provide an existing, dormant "shell" company. The company would be owned by a trust administered by a bank, which would take instructions from Ryder through "wish letters." He added that a domestic corporation would be set up in Minnesota to receive funds from the Cayman corporation and convey Ryder's money back to him as a "loan."

Ushijima indicated that his fee would be $5,000 and that the best way to send the money to the Caymans was in cash by courier rather than international wire transfers or the mails. Ushijima warned Ryder that the courier would not declare the cash taken to the Caymans even though it was illegal to take more than $10,000 out of the United States without declaring it. Ushijima also warned Ryder that the cash could be seized if the courier were caught. The defendants acknowledged that the federal reporting requirement also applied to any negotiable instrument, including bearer bonds.

At this same meeting, Ushijima said the fee for Goulding, himself and courier would be $15,000. Thereupon Ryder gave Goulding a $5,000 cashier's check in part payment and made arrangements to deliver $30,000 to the defendants to be sent through the Caymans, with $7,000 additional cash to go to the defendants as their fee and for expenses.

In March 1987, Ryder again met with Goulding at the O'Hare Hilton and gave Goulding $37,000 in $100 bills. Goulding recommended that Ryder report the income but added that the taxes, interest and penalties would total close to 100% of Ryder's money.

Ryder's $30,000 was transported by courier to the Caymans about March 7, 1987. No Customs Service report was filed. Ushijima also traveled to the Caymans on March 7 and Goulding followed on March 9. The two arranged for the formation there of a trust, a corporation known as Tarbet Investments, Ltd. C.I., and a corporate bank account in Tarbet's name. Ownership of Tarbet was put in the name of local Cayman nominees. Goulding later formed a domestic corporation (Tarbet Investments, Ltd. U.S.) in Minnesota and opened a corporate bank account there for that corporation.

On May 13, 1987, Trevor Lloyd, a Cayman resident acting on instructions of Ushijima, caused $28,000 of Ryder's money to be wire-transferred from the corporate account of Tarbet C.I. in the Caymans to the Minnesota bank account of Tarbet U.S. Goulding provided Ryder with fictitious documents showing a $15,000 loan from Tarbet U.S. Goulding also provided Ryder with a blank promissory note to be used to create fictitious loan documents for subsequent money transfers pursuant to the scheme.

On May 18, 1987, Ryder met with Ushijima in his law office in Des Plaines, Illinois, to arrange for the transfer of an additional $120,000 to the Caymans. Ushijima said he would deposit the money into his corporate escrow account in Chicago and convert $100,000 of the $120,000 into bearer bonds through his Chicago broker. Ushijima asserted that he was "laundering" the money for Ryder. He told Ryder that the bonds would be taken to the Caymans by the same courier who had transported the initial $30,000 and that once the bonds were in the Caymans, he would open an account in the name of Tarbet C.I. to sell the securities. The balance of Ryder's $120,000 was to be wire-transferred to Ushijima's corporate escrow account in the Caymans. When Ryder expressed concern about possible questioning of Ushijima about where the money came from, Ushijima replied that he would say it came from clients but would not identify them under the attorney-client privilege. Ryder and Ushijima made arrangements for the two of them and Goulding to meet the next day for Ryder to deliver the additional $120,000.

The next day Ryder met with defendants at an Elk Grove, Illinois, motor lodge. Ryder thereupon gave Goulding $120,000 in cash. Goulding counted the cash and then left to meet Ushijima at his law office. $100,000 in bearer bonds were purchased as Ushijima had described and were transported by courier to the Caymans on June 6, 1987, and sold. Although required, no Customs report was filed when the bearer bonds were transported out of the United States. The additional $20,000 was wire-transferred to the Caymans and deposited, along with the proceeds of the sale of the bearer bonds, into the Tarbet C.I. bank account in the Caymans. On June 29, $118,000 was wire-transferred by Trevor Lloyd from the Tarbet C.I. account in the Caymans to the Tarbet U.S. Minnesota account. In all, there were 15 uses of the mails to further the defendants' scheme to defraud the Internal Revenue Service of taxes due.

At trial the defendants sought to show that they acted in good faith to protect the confidentiality of their client. Ushijima testified that Ryder's money had not been transported by courier to the Caymans. Ushijima, his step-daughter and her boyfriend testified that $30,000 in cash had been taken to the Caymans by Ushijima and a group of five relatives and friends and that Ushijima had given...