U.S. v. Talebnejad

• Decision Date: 28 September 2004
• Docket Number: No. CRIM.PJM 03-0517.,CRIM.PJM 03-0517.
• Citation: 342 F.Supp.2d 346
• Parties: UNITED STATES of America v. Farhad TALEBNEJAD, et al. Defendants.
• Court: U.S. District Court — District of Maryland

342 F.Supp.2d 346

UNITED STATES of America v. Farhad TALEBNEJAD, et al. Defendants.

No. CRIM.PJM 03-0517.

United States District Court, D. Maryland.

September 28, 2004.

Christopher Mead, Esquire, Washington, DC, Joseph Lee Evans, Esquire, Dale P. Kelberman, Esquire, Baltimore, MD, Timothy Joseph Sullivan, Esquire, College Park, MD, for Plaintiffs.

David Salem, Esquire, Greenbelt, MD, for Defendants.

OPINION

MESSITTE, District Judge.

I.

Farhad, Fatameh and Abdolrahman Talebnejad have been charged with one count of conspiracy to conduct an unlicensed money transmitting business in violation of 18 U.S.C. § 371 (Count I), and two counts of operating an unlicensed money transmitting business in violation of 18 U.S.C. § 1960 (Counts II and III). Defendants have filed a Motion to Dismiss Indictment and Forfeiture Claims and a Motion to Dismiss Indictment for Selective Prosecution or, in the Alternative, for Discovery Related to Selective Prosecution Motion. Having considered the Government's Oppositions and oral argument of counsel, the Court will GRANT WITHOUT PREJUDICE the Motion to Dismiss the Indictment and Forfeiture Claims. The Motion to Dismiss Indictment for Selective Prosecution will be DEEMED MOOT.

II.

In 1992, Congress adopted the original version of 18 U.S.C. § 1960 which provided:

(a) Whoever conducts, controls, manages, supervises, directs, or owns all or part of a business, knowing the business is an illegal money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.

(b) As used in this section —

(1) The term "illegal money transmitting business" means a money transmitting business which affects interstate or foreign commerce in any manner or degree and —

(A) is intentionally operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law; or

(B) fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section .... (Emphasis added)

18 U.S.C. § 1960 (1992) (amended by 2001 Amendments, Pub.L. No. 107-56, § 373(a)).

The purpose of the statute was "to combat the growing use of money transmitting businesses to transfer large amounts of the monetary proceeds of unlawful enterprises." United States v. Velastegui, 199 F.3d 590, 593 (2d Cir.1999). See also S. Rep. 101-460, reprinted in 1990 U.S.S.C.A.N. 6658-59 ("The New York Times reported on September 25, 1989... that State banking regulators around the country have found that thousands of small, inner-city money transmitting and checkcashing businesses are sending billions of dollars to drug dealers in South America and Asia and that the majority of these businesses are illegal, unlicensed and unregulated.... The legislation does not preempt State laws. Instead, it provides for an expanded Federal role in a way that enhances and supplements State regulation.")

In 2001, in the wake of the traumatic events of September 11 of that year, Congress adopted the PATRIOT Act, modifying 18 U.S.C. § 1960, as follows:

(a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all of part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both,

(b) As used in this section —

(1) the term "unlicensed money transmitting business" means a money transmitting business which affects interstate or foreign commerce in any manner or degree and —

(A) is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable;

(B) fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section;¹ or

(C) otherwise involves the transportation or transmission of funds that are known to the defendant to have been derived from a criminal offense or are intended to be used to promote or support unlawful activity;

(2) the term "money transmitting" includes transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier; and

(3) the term "State" means any State of the United States, the District of Columbia, the Northern Mariana Islands, and any commonwealth, territory, or possession of the United States. (Emphasis added.)

Legislative history behind the amendment is scant, but the Department of Justice recently summarized its purpose in its Report From the Field: The USA PATRIOT Act at Work:

The USA PATRIOT Act also strengthened the criminal laws against terrorism by making it easier to prosecute those responsible for funneling money to terrorists. Under previous federal law, 18 U.S.C. § 1960, those who operated unlicensed money transmitting businesses were entitled to rely on the affirmative defense that they had no knowledge of the applicable state licensing requirements. Some of these businesses, called hawalas, have funneled extensive amounts of money to terrorist groups abroad. Section 373 of the USA PATRIOT Act amended federal law by eliminating this loophole requiring that the defendant know about state licensing requirements.... (Emphasis added)

DOJ REPORT 10 (July 2004).

Section (b)(1)(A) of § 1960 refers to acts "punishable as a misdemeanor or a felony" under the law of a given state which, in this case, implicates the law of the State of Maryland as it pertains to money-transmission businesses.

Section 12-405 of the Financial Institutions Article of the Maryland Code provides that:

A person may not engage in the business of money transmission if that person, or the person with whom that person engages in the business of money transmission, is located in the State unless that person:

(1) Is licensed by the Commissioner;

(2) Is an authorized delegate of a licensee under whose name the business of money transmission occurs; or

(3) Is a person exempted from licensing under this subtitle.

Section 12-401(1) of the Article defines "money transmission" as follows:

(1) "Money transmission" means the business of selling or issuing payment instruments or stored value devices, or receiving money or monetary value, for transmission to a location within or outside the United States by any means, including electronically or through the Internet.

(2) "Money transmission" includes:

(i) A bill payer service;

(ii) An accelerated mortgage payment service; and

(iii) Any informal money transfer system engaged in as a business for, or network of persons who engage as a business in, facilitating the transfer of money outside the conventional financial institutions system to a location within or outside the United States.

Section 12-430 of the Article sets out the penalties for violation of the law:

Any person who knowingly and willfully violates any provision of this subtitle is guilty of a felony and on conviction is subject to a fine not exceeding $1,000 for the first violation and not exceeding $5,000 for each subsequent violation or imprisonment not exceeding 5 years or both.² (Emphasis added)

III.

According to the Second Superseding Indictment in this case, beginning no earlier than October 26, 2001 and continuing through in or about December, 2002, Abdolrahman Talebnejad, his wife Fatameh, and their son Farhad, were owners, directors or operators of two money transmitting businesses located in Potomac, Maryland, namely Shirazi Money Exchange, a/k/a/ Shirazi Exchange, Inc., and Shirazi Arz, Inc., a/k/a Shirazi Arz Exchange. Both entities, according to the Indictment, are "in the business of accepting currency and money for transfer into and out of the United States through foreign currency exchanges and financial institutions in countries including the United Arab Emirates." As such, the Government charges that the Talebnejads have violated 18 U.S.C. § 1960, either by conducting money transmitting businesses unlicensed by the State of Maryland under 18 U.S.C. § 1960(b)(1)(A), or because Defendants failed to comply with federal registration requirements for such businesses under § (b)(1)(B). The operation of these businesses also underlies the Government's charge that, from in or about December 2000 through in or about December 2002, Defendants conspired to violate the law regarding the operation of money transmitting businesses (Count I), either because the businesses were unlicensed by the State of Maryland or because Defendants failed to comply with the federal registration requirements for such businesses as set forth in 31 U.S.C. § 5330.³

IV.

Defendants argue that the federal statute prohibiting unlicensed money transmitting businesses violates Equal Protection guarantees under the Due Process Clause of the Fifth Amendment. Some states, they point out, punish unlicensed businesses of this type, while others do not. Since punishment involves incarceration, a fundamental right is burdened; hence the strict scrutiny standard of review applies. Because there is no compelling reason why citizens of different states should be treated differently in this regard, the statute cannot withstand constitutional scrutiny. Defendants also contend that the statute's lack of any intent element violates Due Process; that the statute is void for vagueness because it fails to provide adequate notice of what it prohibits and who is subject to its proscriptions and contains no standard for proper enforcement; that the Indictment must be dismissed for failure to inform them of the offenses with which they are charged; and that Defendants' prospective forfeiture of $18 million, as suggested...