U.S. v. Rude, s. 95-30198

• Decision Date: 10 September 1996
• Docket Number: 95-30207 and 95-30208,Nos. 95-30198,95-30205,s. 95-30198
• Citation: 88 F.3d 1538
• Parties: 45 Fed. R. Evid. Serv. 245, 97 Cal. Daily Op. Serv. 5143, 96 Daily Journal D.A.R. 11,031, 96 Daily Journal D.A.R. 8275 UNITED STATES of America, Plaintiff-Appellee, v. Morreon B. RUDE, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Stafford Y.L. MEW, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Charles E. ANDREWS, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Rodney H.S. KIM, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1538

88 F.3d 1538

45 Fed. R. Evid. Serv. 245, 97 Cal. Daily Op.

Serv. 5143,

96 Daily Journal D.A.R. 11,031,

96 Daily Journal D.A.R. 8275

UNITED STATES of America, Plaintiff-Appellee, v. Morreon B. RUDE, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Stafford Y.L. MEW, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Charles E. ANDREWS, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Rodney H.S. KIM, Defendant-Appellant.

Nos. 95-30198, 95-30205, 95-30207 and 95-30208.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 6, 1996.

Decided July 10, 1996.

As Amended on Denial of Rehearing and Rehearing En Banc

Sept. 10, 1996. ^*

Charles A. Johnston, Felker, Lazares & Johnston, Tacoma, Washington, for defendant-appellant Rude.

Ronald G.S. Au, Honolulu, Hawaii, for defendant-appellant Mew.

Stephen E. Robinson, Fleeson, Gooing, Coulson & Kitch, Wichita, Kansas, for defendant-appellant Andrews.

Ronald D. Ness, Port Orchard, Washington, for defendant-appellant Kim.

Robert M. Westinghouse and Carl Blackstone, Assistant United States Attorneys, Seattle, Washington, for plaintiff-appellee.

Appeals from the United States District Court for the Western District of Washington, Franklin D. Burgess, District Judge, Presiding. D.C. Nos. CR-94-05246-3, CR-94-05246-01, CR-94-05246-06 and CR-94-05246-02.

Before LAY, ^* WRIGHT and LEAVY, Circuit Judges.

LAY, Circuit Judge:

These consolidated appeals involve a scheme to defraud investors, including Unity House, Inc., a Hawaii non-profit corporation, of several million dollars. Morreon B. Rude, Rodney H.S. Kim, and Stafford Mew appeal their judgments of conviction for wire fraud, money laundering, and conspiracy. Charles Andrews, who pleaded guilty to one count of testifying falsely before a grand jury in exchange for cooperation in the prosecution of

the other defendants, appeals his sentence. We affirm.

THE "PRIME BANK NOTE" SCHEME

At trial the government adduced evidence that the defendants conspired to induce investments in what they termed "prime bank note" transactions. ¹ The subject transactions were described to potential investors as a form of international bank paper purchased from issuing banks at a discount and sold to wholesale banks for a profit. Defendants held themselves out as persons experienced in such transactions and assured potential investors that the notes would yield monthly returns of roughly two to five percent. They further represented that the investments would not be at risk and in fact would remain in the investors' own accounts. Each of these representations was false.

The scheme began in May 1992, when Morreon Rude and Stafford Mew incorporated North Pacific Investments, Inc. ("NPI"), a Washington corporation, as a means of perpetrating defendants' fraudulent activities.

In December 1992, after several furtive attempts to sell the notes to third parties, representatives of Unity House, a Hawaii non-profit company with assets of more than $50 million, agreed to invest $10 million in the notes. They asked Roderick Rodriguez, the executive director of Unity House, to contact Bank of America to obtain a letter of credit, but Bank of America declined. Mew, NPI's principal, offered to procure a letter of credit from a European bank on behalf of Unity House. Mew represented that an account for Unity House could be opened at Credit Suisse in Geneva, Switzerland, and that the money would remain in the bank earning interest. The representatives of Unity House accepted Mew's proposal. Anthony Rutledge, the president of Unity House, and Mew signed a Limited Power of Attorney and a Private Participation Agreement, each prepared by Kim, authorizing the arrangement, whereunder NPI was given a general power of attorney in order to transfer funds out of the Credit Suisse account. Mew then enlisted the help of Charles Andrews, a commodities broker with a seat on the Chicago Mercantile Exchange, who met him in Geneva, Switzerland to establish the account. On January 19, 1993, Unity House transferred $10 million to the Credit Suisse account.

Between February and April 1993, Mew effected transfers of all $10 million from Credit Suisse to NPI's account at Seafirst Bank. In April, Rutledge received a letter from Mew stating that NPI was holding $625,000 in earnings for Unity House, and in July 1993 Rude transferred $650,000 to Unity House. Unity House was not aware, however, that the money was simply part of its original investment; it understood the payment as a return on its investment, and in fact did not learn of NPI's activities until September 1993, when Rutledge was interviewed by law enforcement agents. In addition, Mew and Rude transferred $2 million to a discretionary account from which Andrews traded until November, when the remaining $350,000 was seized. Andrews received $400,000 in commissions during the course of the trading, and the balance of that $2 million was lost. Another substantial portion of the money was deposited in various accounts and used to trade stocks and commodities, generating losses of approximately $3,667,000. Federal agents seized most of this money. Of the remaining funds, Mew and Rude together received $588,538; Kim received $106,666; and Gonzales received $792,000. The defendants never purchased any prime bank notes or letters of credit, though they maintain that they attempted to do so.

Law enforcement investigations led to a grand jury proceeding in August 1993. Rude then first admitted that Unity House was the source of the $10 million transferred to NPI's Seafirst account. He claimed the money was a loan, and records he produced referred to the transaction as such. In November 1993, federal agents seized the funds in NPI's various accounts. Kim, Rude, Mew, and Jack Gonzales ² were indicted on April 20, 1994.

Andrews appeared before a grand jury in Seattle on December 15, 1993. During his testimony, he failed to disclose the number of times he had met Mew, in an effort to conceal the fact that he and Mew had been in Switzerland to set up the Credit Suisse account. On September 14, 1994, the grand jury returned a superseding indictment charging Andrews, along with Mew, Kim, and Gonzales, with conspiracy, wire fraud, and money laundering. Andrews was also charged with making a false declaration to the grand jury. He later admitted that he had testified falsely and entered a plea to that charge in exchange for his agreement to cooperate in the prosecution of the other defendants. ³ The remaining four defendants proceeded to trial, and a jury convicted them on all counts on March 21, 1995. Kim, Rude, and Mew were sentenced on June 9, 1995. ⁴

CHARLES ANDREWS

Andrews argues that the district court erred in the imposition of his sentence by failing to make factual findings requisite to the application of U.S.S.G. § 2J1.3(c)(1) (1994), which provides:

If the offense involved perjury, subornation of perjury, or witness bribery in respect to a criminal offense, apply § 2X3.1 (Accessory After the Fact) in respect to that criminal offense, if the resulting offense level is greater than that determined above.

Andrews acknowledges that cross-referencing U.S.S.G. § 2X3.1 would have been appropriate had the district court found that he committed perjury "in respect to" the criminal offense of money laundering, for which his co-defendants were convicted, but suggests the court applied § 2X3.1 notwithstanding its failure to make such a finding, thus violating both § 2J1.3 and Fed.R.Crim.P. 32(c)(3)(D). Although he objected to the presentence investigative report's characterization of the facts, he suggests the court simply deferred to the probation officer's recommendation to cross-reference § 2X3.1 without addressing his objections.

Contrary to Andrews' claim, we find that the district court was aware that it needed to make such a finding, and that it did so. See Excerpts of Record D at 28 ("[T]hat will be my finding, that the offense level will be based on that cross reference."). Rule 32(c)(1) does not require the court to articulate the reasoning for its finding. See United States v. Karterman, 60 F.3d 576, 583 (9th Cir.1995); United States v. Fagan, 996 F.2d 1009, 1016 (9th Cir.1993); United States v. Peters, 962 F.2d 1410, 1415 (9th Cir.1992). Although the court did not articulate the facts upon which it relied in ruling as it did, we are satisfied that the requisite finding was made.

The remaining issue is whether the court's finding that Andrews committed perjury in respect to the money laundering offenses of his codefendants was justified. U.S.S.G. § 2J1.3(c)(1) requires only that the defendant's perjury be "in respect to a criminal offense" for cross-referencing to be justified. The Guideline requires neither that the defendant have committed perjury in respect to his own criminal offense, nor that he have committed perjury in respect to an adjudicated criminal offense. Provided an indictment and conviction are forthcoming, as they were here, and so long as the defendant knew or had reason to know, at the time of his perjury, that his testimony concerned such a criminal offense, the "in respect to" element of § 2J1.3(c)(1) is satisfied.

At the time of his perjured testimony, Andrews knew that Mew was under investigation for money laundering and wire fraud, as verified by a memorandum he prepared and sent to Mew following his interview with federal agents, and the seizure warrant itself,

which detailed the factual basis for the forthcoming allegations. Andrews also knew that Mew did not want him to tell the grand jury about the Credit Suisse account--a fact which belies his claim that he thought the charges arose from a legitimate business transaction. These facts demonstrate that Andrews' perjury was "in respect to" the other defendants' money laundering offenses. We find no error in the district court's sentencing of...