U.S. v. Wydermyer
| Decision Date | 14 March 1995 |
| Docket Number | D,Nos. 137,198,s. 137 |
| Citation | 51 F.3d 319 |
| Parties | UNITED STATES of America, Appellee, v. Billy WYDERMYER, Defendant, Thomas Honton and Jermon Carter, also known as "Jerry Carter," also known as "Dr. Carter," Defendants-Appellants. ockets 93-1845, 93-1846. |
| Court | U.S. Court of Appeals — Second Circuit |
Paul P. Rinaldo, Forest Hills, for defendant-appellant Thomas Honton.
Harold J. Pokel, New York City, for defendant-appellant Jermon Carter.
Tanya Y. Hill, Asst. U.S. Atty., E.D.N.Y., Brooklyn, NY (Zachary W. Carter, U.S. Atty., and Peter A. Norling, Asst. U.S. Atty., of counsel), for U.S.
Before: NEWMAN, Chief Judge, WALKER, and CALABRESI, Circuit Judges.
Thomas Honton and Jermon Carter appeal from judgments of conviction entered after a jury trial in the United States District Court for the Eastern District of New York (Edward R. Korman, Judge ) for (1) conspiracy under 18 U.S.C. Sec. 371 to conduct a financial transaction involving property represented by a law enforcement officer to be proceeds of criminal violations of the Arms Export Control Act, 18 U.S.C. Sec. 1956(a)(3)(B), and to make false statements to the government in violation of 18 U.S.C. Sec. 1001, and (2) attempting to conduct a financial transaction involving property represented by a law enforcement officer to be proceeds of criminal violations of the Arms Export Control Act, 18 U.S.C. Sec. 1956(a)(3)(B). 1
Carter raises three claims on appeal: (1) there was insufficient evidence that, as required by 18 U.S.C. Sec. 1956(a)(3)(B), the government made an explicit representation that the proceeds came from specified illegal activity, or that he engaged in a "financial transaction" within the meaning of the money laundering statute; (2) the indictment failed to state elements of the offense on both counts and should be dismissed; and (3) Congress did not intend "sting" legislation to apply to first-time offenders. Honton makes two arguments on appeal: (1) the indictment should be dismissed for the defects alleged by Carter and (2) there was insufficient evidence that he knowingly participated in a money laundering conspiracy.
March 12, 1992 was a fateful day for Jermon Carter. On that day, he received a phone call from Eugene Forster, an old business associate. Unbeknownst to Carter, Forster had recently been arrested by the United States government for conspiring to launder money derived from arms smuggling. Following his arrest, Forster entered into a cooperation agreement with the government whereby he would pursue any "ongoing relations" with his erstwhile accomplices in order to set up a sting operation. During the phone call, which the government recorded, Forster reminded Carter of their previous conversation about "switching ... soft money to hard money," which, Forster explained at trial, was a well-known financial services colloquialism for getting money recorded in or through a bank. Forster asked if Carter still had those contacts. Carter said that he would check to see if he did and asked how much money was involved. Forster replied that the trial run would involve "a hundred grand," with more in the offing once they made the company that provided the money "comfortable." The two men then discussed a "situation" in which the two of them had been formerly involved where the "money ... didn't show up," to their mutual disappointment.
Two hours after the conversation, Carter sent Forster a fax confirming his interest in the scheme. On March 16, 1992, in another recorded conversation, Carter told Forster he had a foolproof method for converting the cash. The scheme involved an Italian diplomat who would take the money into a private plane owned by an Italian bank. The client who supplied the money would also fly in the plane but would never handle the money. When the plane landed, a representative of the bank would pick up the diplomat and the client and deposit the funds. Carter said that his contacts would charge a fee of 25 percent of the money laundered for their service, to which his cut of $50,000 would be added. Moreover, to make the transaction worthwhile to his contacts, it had to involve at least a million dollars. When Forster balked, Carter admonished him,
[Y]ou don't want to do this more than ... once a year.... I mean ... this is serious.... [T]his bank has contacts right here in the embassy.... [T]his is the Italian embassy ... that's going to be ... routing money, and they don't want to mess with a dime, you know?
And though "presumably the money was clean," Carter advised Forster that Forster's client would be paying for the "guarantee of services" of working with the Italian diplomatic corps and that "[t]hey could handle it even if it was dirt."
In April of 1992, Carter sought to buff his image with Forster. In a recorded conversation, he bragged of deals he had done with the Italian government involving transactions of forty and sixty million dollars, and assured Forster that the contacts he was planning to use for the cash conversion were "major hitters" who had just closed a two-hundred million dollar deal.
On May 5, 1992, Forster placed another recorded call to Carter to set up a meeting between his clients and Carter's contacts. Forster asked Carter whether one of Carter's people knew that this was a "money laundering situation," and Carter cautioned him not to use that expression since the phones might be tapped.
The first meeting between the purported clients and the Carter group took place in New York on May 27, 1992. Forster introduced U.S. Customs Service Special Agent Dennis Doyle, posing as Dennis Dolan, and Agent Joe King, posing as Joe Kennedy, as representatives of his client, Kennedy and Associates. Carter in turn introduced his coconspirators, Lorenzo Mazza and codefendant Billy Wydermyer. Doyle explained that his group got its money from arms sales and needed help getting the money out of the country, and Wydermyer outlined the planned laundering scheme. Negotiations, which were captured in a series of recorded telephone conversations, continued between Agent Doyle and the coconspirators, and it was eventually agreed that Carter's group would launder two million dollars for Kennedy and Associates.
In mid-June, Carter sent a fax to Forster outlining an alternative to the elaborate scheme involving the Italian banks and diplomats. The new proposal was for Carter to secure the services of one "Tom," who, according to Carter, was "an internationally-registered CPA" with "diplomatic immunity for [transporting between countries] up to two million dollars ... in cash or securities." In a later conversation, Wydermyer confirmed to Agent Doyle that the CPA's full name was Tom Honton.
The sting culminated on June 30, 1992, at the Marriott Hotel at LaGuardia Airport in New York. Agents Doyle and King attended, as did Carter, Wydermyer, Mazza, and Honton. Honton explained that he would declare the two million dollars as business revenues belonging to BFD Limited, a Cayman Islands corporation he had organized. Honton explained elliptically that Customs could not "touch" him because his corporation had a "thirty-year exemption," and he had diplomatic immunity in the Cayman Islands. When Agent King inquired about whether Honton had a diplomatic passport, Honton retreated, saying that he had "business immunity, [which is] like ... diplomatic immunity" but preferable after a recent crackdown on diplomatic money laundering. Agent Doyle then asked if Honton had been involved in any previous transactions, and Wydermyer assured him, The agents and the conspirators then discussed the mechanics of ultimately depositing the funds in a bank in Monte Carlo, and then having the funds transferred to Kennedy and Associates' Swiss bank account. The conspirators promised that "Prince Ranier" would take care of Agent Doyle's hotel arrangements in Monte Carlo, if need be.
As the conversation progressed, Agent Doyle explained that he needed to complete the transaction as quickly as possible. He said that he had an arms deal pending, and that he needed to get the money out of the United States fast to avoid "screw[ing] up the people who are purchasing the weapons in the United States here." Agent Doyle continued,
So for this first shipment, we'd like to send the two million dollars out using this route. We'll get it over there, we'll smuggle the weapons in and we'll take care of the distribution in and we'll take care of the distribution on that.... In four weeks, which is going to be the second shipment that we talked about, it's four million dollars that we have to get out.
The parties discussed how money from the next arms shipment would be handled. At the end of the meeting, the agents gave the defendants the money to count. The defendants were arrested after they had counted $100,000 of the money.
Following a jury trial, defendants-appellants Carter and Honton were convicted on both counts. Defendants argued entrapment to the jury, but the jury rejected that defense.
The district court sentenced each defendant to a probation term of five years, with the special condition that each spend ten months in a halfway house or community treatment facility.
Defendants challenge both counts of the superseding indictment for failing to state elements of the charged offenses. Count One charged that the defendants
did knowingly and willfully ... conspire ... to commit certain offenses against the United States, namely:
(i) conducting a financial transaction involving property represented by a law enforcement officer to be the proceeds of specified unlawful activity, to wit, criminal violations of the Arms Export Control Act, with the intent to...
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