U.S. v. Tarkoff

• Decision Date: 20 February 2001
• Docket Number: No. 99-13223,Docket No. 97-00581-CR-JAL,99-13223
• Parties: (11th Cir. 2001) UNITED STATES OF AMERICA, Plaintiff-Appellee. v. MICHAEL H. TARKOFF, Defendant-Appellant, D. C
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 991

242 F.3d 991 (11th Cir. 2001)

UNITED STATES OF AMERICA, Plaintiff-Appellee. v. MICHAEL H. TARKOFF, Defendant-Appellant,

No. 99-13223

D. C. Docket No. 97-00581-CR-JAL

UNITED STATES COURT OF APPEALS

ELEVENTH CIRCUIT

Feb. 20, 2001

Appeal from the United States District Court for the Southern District of Florida

Before WILSON, KRAVITCH and COX, Circuit Judges.

KRAVITCH, Circuit Judge:

I. Issue

This appeal presents an issue of first impression in this circuit: whether a defendant may be convicted for conspiring to violate and violating the money laundering statute, 18 U.S.C. 1956(h) and (a)(1)(B)(i), where the indictment charged and the government proved that the two monetary transactions at issue occurred wholly outside the United States.

II. Facts

Michael Tarkoff appeals his conviction for conspiracy to commit money laundering, 18 U.S.C. 1956(h), and two counts of money laundering, 18 U.S.C. 1956(a)(1)(B)(i). In early 1995, Tarkoff, a criminal defense lawyer, represented Ismael Arnaiz, who was a target of a grand jury investigation of a scheme in which Arnaiz and his business partner, Akioshi Yamada, defrauded Medicare. Arnaiz and Yamada's scheme consisted of paying people to "recruit" sham patients to visit Arnaiz and Yamada's medical clinics and provide their Medicare numbers to the billing clerk. The clinics would then bill Medicare for medical services that either had not been provided to the sham patients, or if provided, were not necessary. During a two-and-one-half year period, the clinics fraudulently billed Medicare $120 million.

During negotiations in 1995 regarding a plea bargain for Arnaiz, Assistant United States Attorney ("AUSA") Marc Garber informed Tarkoff that Arnaiz's scheme resulted in losses to Medicare of approximately $20-$40 million. At that time, Tarkoff did not claim that Arnaiz was not guilty of Medicare fraud, but merely argued that the $20-$40 million dollar figure was too high and that Arnaiz caused losses to Medicare of only $6 million (the dollar amount was relevant to sentencing Arnaiz). In addition, Tarkoff did not indicate that Arnaiz had any legitimate sources of income, but repeatedly represented that Arnaiz had no significant assets. Moreover, Melissa Rockhill, Tarkoff's legal secretary at the time, testified that Tarkoff acknowledged to her that Arnaiz was involved in Medicare fraud.

Rockhill also testified that in late January or early February 1996, Tarkoff told her that he and another attorney who had dealings with Arnaiz, Joaquin "Jack" Fernandez, had discussed the need to move Arnaiz's money in order to hide it from the United States government. On February 2, 1996, Tarkoff met with FBI Agent Gramlich and the AUSA then responsible for the case, at which meeting Agent Gramlich told Tarkoff that all of the money in Arnaiz's possession came from Medicare fraud, was subject to seizure by the government, and was not to be moved.

Between February 5 and 8, 1996, there were three wire transfers totaling approximately $470,000 from two Smith Barney accounts in Miami that were controlled by Arnaiz, to an account in the name of Rockside Enterprises at a bank in Curacao.¹ The source of the funds in those accounts was Arnaiz's Medicare fraud. Tarkoff and Fernandez, using United States passports, traveled from the United States to Israel on February 10, 1996, and each opened a numbered account at the Bank Hapoalim in Tel Aviv on February 12, 1996. Rockhill and Cheryl Crane, Fernandez's girlfriend at the time, accompanied Tarkoff and Fernandez on this trip. On February 16, $400,000 was transferred from the Rockside Enterprises account in Curacao to Fernandez's Israeli account. Tarkoff told Rockhill that the $400,000 was Arnaiz's money, and that it was being routed from Curacao to Israel in order to hide it from the government. Fernandez gave power of attorney over his account to Sharon Gershoni, an Israeli attorney whom Tarkoff had recommended, and she directed that $50,000 of the $400,000 deposited in Fernandez's account be transferred to Tarkoff's account. On February 20, 1996, also at Gershoni's direction, two bank drafts of $50,000 each were made payable to Jack Fernandez from Fernandez's Israeli account. Those checks subsequently were deposited into two Miami accounts controlled by Fernandez. Some of this money was routed to Arnaiz.

Tarkoff gave Rockhill the documents relating to his Israeli bank account to store in a safe deposit box in her home town of Indianapolis, Indiana, in order to avoid their discovery in the event his home or office was searched. Tarkoff also instructed Rockhill to deny any knowledge of the bank transactions in Israel if she was questioned by the government. Tarkoff did not tell his accountant about the $50,000 in his Israeli account until after he learned that his accountant had received a grand jury subpoena for Tarkoff's financial records in 1997.

Tarkoff raises several issues on appeal: (1) whether his conviction for conspiring to violate and violating the money laundering statute can stand where the indictment charged and the government proved that the two transactions at issue occurred wholly outside the United States; (2) whether the evidence is sufficient to support a finding that Tarkoff knew the money involved in the transactions was the proceeds of some form of unlawful activity; (3) whether the district court erred by excluding certain documentary evidence that Tarkoff offered to corroborate his testimony that he reasonably believed the money was derived from a lawful source; (4) whether the district court erred by prohibiting any reference to the prior trial and acquittal of Fernandez during Tarkoff's cross-examination of Agent Gramlich; (5) whether the district court erred by excluding the proffered testimony of attorney Jay Levine, who would have testified that Tarkoff told him that Arnaiz had legitimate assets; (6) whether the district court erred by denying Tarkoff's motion for mistrial where the prosecutor argued in closing that there was no evidence to corroborate Tarkoff's testimony that he believed Arnaiz had legitimate sources of income; (7) whether the district court erred by refusing to instruct the jury on Tarkoff's defense of "good faith reliance" upon the representations made by Arnaiz and the AUSA; and (8) whether the district court erred by instructing the jury on the theory of "deliberate ignorance." Only the first of these issues merits discussion. Applying the legal framework discussed below, we conclude that the record supports Tarkoff's conviction for conspiracy to commit money laundering, 18 U.S.C. 1956(h), and two counts of money laundering, 18 U.S.C. 1956(a)(1)(B)(i), and therefore affirm.

III. Standard of Review

Whether there is sufficient evidence to support a conviction is a question of law which this Court reviews de novo. See United States v. Majors, 196 F.3d 1206, 1210 (11th Cir. 1999). The relevant question is "whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319 (1979).

IV. Discussion

Tarkoff contends that he was entitled to judgment of acquittal because the transactions in which he took part occurred wholly outside the United States, and therefore did not affect interstate or foreign commerce, which is a necessary component of an element of the money laundering statute under which he was convicted. Tarkoff's convictions are based on his participation in two transactions: (1) the wire transfer of $400,000 from Curacao to Fernandez's bank account in Israel, and (2) the transfer of $50,000 of those funds to Tarkoff's Israeli bank account. For his role in these transactions, Tarkoff was...