United States v. Freeman
| Docket Number | CRIMINAL 21-cr-41-JL,Opinion 2023 DNH 106P |
| Decision Date | 22 August 2023 |
| Parties | United States of America v. Ian Freeman |
| Court | U.S. District Court — District of New Hampshire |
The defendant in this case, Ian Freeman, was tried on charges of operating an unlicensed money transmitting business (Count 1), conspiracy to operate an unlicensed money transmitting business (Count 2), money laundering (Count 3), conspiracy to commit money laundering (Count 4), and four counts of attempt to evade or defeat taxes for each year from 2016 to 2019 (Count 5-8). Prior to trial, Freeman joined co-defendant Aria DiMezzo's[1] motion to dismiss Counts 1 and 2. After argument, the court denied the motion by oral order.[2] Following the court's ruling, DiMezzo plead guilty, and Freeman went to trial. After a 10-day trial, the jury returned guilty verdicts on all eight counts. Freeman orally moved under Rule 29 for judgment of acquittal as to each count at the end of the prosecution's case-in-chief, and he renewed the motion at the end of the defense case. The court took the oral motion under advisement and allowed Freeman's written motion after trial.
In his motion for acquittal, Freeman incorporates the arguments for dismissal of Counts 1 and 2, which were first raised in DiMezzo's motion to dismiss.[3] Freeman also argues that the trial evidence was insufficient to show that he knowingly engaged in the business of money transmitting, willfully joined a conspiracy to do so, or that any money “transmission” actually occurred. As for Counts 3 and 4, Freeman contends that the evidence was insufficient to support the conclusion that he knowingly conducted a money laundering transaction or willfully joined a conspiracy to do so. And finally, Freeman argues that the prosecution failed to prove beyond a reasonable doubt that he owed and evaded federal income tax, as alleged in Counts 5-8.
The court grants Freeman's motion for judgment of acquittal as to the money laundering count, upon finding that the evidence adduced at trial was insufficient to prove that Freeman knew that the prohibited transaction alleged in the indictment occurred. For the reasons articulated in its oral order on the motion to dismiss, and those further explained below, the court denies Freeman's motion for acquittal as to the remaining counts. This order also memorializes the court's oral order denying the motion to dismiss. See, e.g., United States v. Joubert, 980 F.Supp.2d 53, 55 n.1 (D.N.H. 2014), afEd, 778 F.3d 247 (1st Cir. 2015) ().[4]
I. Applicable legal standards
Motion to dismiss. A criminal defendant may move to dismiss an indictment on the ground that it fails to state an offense based on a pure legal issue. See Fed. R. Crim. P 12(b)(3)(B)(v). A motion to dismiss an indictment, however is not a way to test the sufficiency of the evidence behind an indictment's allegations. United States v. Guerrier, 669 F.3d 1, 4 (1st Cir. 2011).
Motion for judgment of acquittal. “No person shall . . . be deprived of life, liberty, or property, without due process of law.” U.S. Const. amend. V. The Fifth Amendment's due process clause “prohibits the criminal conviction of any person except upon proof of guilt beyond a reasonable doubt.” Jackson v. Virginia, 443 U.S. 307, 309 (1979). Accordingly, “[a]fter the prosecution closes its evidence or after the close of all the evidence, the court on the defendant's motion must enter a judgment of acquittal of any offense for which the evidence is insufficient to sustain a conviction.” Fed. R. Crim. P. 29(a). The court assesses “whether ‘a rational factfinder could find, beyond a reasonable doubt, that the prosecution successfully proved the essential elements of the crime.'” United States v. Ortiz, 447 F.3d 28, 32 (1st Cir. 2006) (quoting United States v. Moran, 312 F.3d 480, 487 (1st Cir. 2002)). If the “verdict ‘finds support in a plausible rendition of the record,'” the conviction must stand. United States v. Oliver, 19 F.4th 512, 516 (1st Cir. 2021) (quoting United States v. Echeverri, 982 F.2d 675, 677 (1st Cir. 1993)).
When reviewing the evidence, the court “take[s] all inferences in the light most favorable to the verdict . . . give[s] equal weight to both direct and circumstantial evidence, and . . . neither weigh[s] witness credibility nor require[s] the prosecution to ‘eliminate] every possible theory consistent with the defendant's innocence[.]” Id. (quoting United States v. Rivera-Ruiz, 244 F.3d 263, 266 (1st Cir. 2001)). It “evaluate[s] the sum of all the evidence and inferences drawn therefrom, and determine[s] whether that sum is enough for any reasonable jury to find all the elements of the crime proven beyond a reasonable doubt, even if the individual pieces of evidence are not enough when viewed in isolation.” United States v. Santos-Soto, 799 F.3d 49, 57 (1st Cir. 2015). In conducting a sufficiency review, however, “some degree of intellectual rigor is required” and the court must “reject those evidentiary interpretations and illations that are unreasonable, insupportable, or overly speculative.” United States v. Rodriguez-Martinez, 778 F.3d 367, 371 (1st Cir. 2015) (quoting United States v. Spinney, 65 F.3d 231, 234 (1st Cir. 1995)).
II. Background
Consistent with the Rule 29 standard, the court draws on the evidence that the prosecution presented at trial when reciting the facts. This case concerns a business that Freeman and his colleagues[5] operated, in which they charged their customers a fee for exchanging fiat currency for virtual currency-specifically, bitcoin.
Freeman conducted the business, in part, on a website, localbitcoins.com. Freeman also interacted with customers on Telegram, an application that allowed for encrypted communications. He gave similar instructions to each of his customers as to the method for conducting a transaction, and directed them to wire fiat currency to particular bank accounts, some of which were held by his colleagues and others by entities such as a “church” that he founded. Freeman then calculated the equivalent value of bitcoin, less the transaction fee, and transferred that bitcoin to a “digital wallet.” A digital wallet is a program or device that stores virtual currency. Recipients of bitcoin enjoy a level of anonymity, since the owner of a digital wallet is harder to identify than the owner of a bank account, for instance. Over the course of the trial, several of Freeman's customers testified that they were the victims of romance (or other online) scams, and they purchased bitcoin from Freeman as part of those scams. Specifically, under the scammer's instruction, the victim deposited fiat currency into one of Freeman's accounts in order to purchase bitcoin that ultimately entered a digital wallet associated with the scammer.
The money laundering charge centers on a bitcoin purchase completed by an undercover agent at one of Freeman's bitcoin exchange machines located in New Hampshire on August 25, 2020. The agent-Special Agent Pavel Prilotsky with the Internal Revenue Service Criminal Investigation Unit-initiated contact with Freeman on localbitcoins.com in or around September 2019. The agent asked to purchase bitcoin from Freeman, and Freeman provided him with instructions on the information he required and the account to which the agent should wire money for his purchase. They continued to interact and complete transactions on the website for a few months. The agent later asked if he could purchase bitcoin from Freeman through other means than localbitcoins.com. Freeman instructed the agent to contact him directly on Telegram.[6]The agent communicated with Freeman several times on Telegram to complete additional bitcoin purchases through bank wire transfers. At one point, Freeman left a voice message for the agent on Telegram, explaining that, if the agent sought to mail money, he should use the United States Postal Service, since a warrant is “supposedly” required to open packages sent through the U.S. mail.[7]
After some time passed, Freeman told the agent about his bitcoin exchange machines in New Hampshire, where customers could complete bitcoin purchases in person. The agent asked whether the machines utilized facial recognition technology, and Freeman assured him that the machines' identifying capabilities had been turned off. The agent continued to communicate with Freeman while completing an $11,000 transaction at a machine located at Thirsty Owl, an establishment in Keene, New Hampshire. Freeman discounted his standard 14% transaction fee to 10% for this purchase.[8]
The agent eventually told Freeman that the money he was exchanging for bitcoin was the product of drug sales. In a subsequent Telegram conversation on July 30, 2020, Freeman wrote, “unfortunately I can't sell you bitcoin because you told me too much about what you do.”[9] The agent expressed disappointment, writing, [10] Freeman replied, “[m]y answer to the question is, I can't KNOWINGLY assist you with financial matters.”[11] The word “knowingly” appeared in all capital letters.
The agent inquired further into Freeman's position, and Freeman explained: You told me you sell drugs. Therefore, to assist you with buying bitcoin would be considered money laundering. Money laundering requires knowledge of the illegal activity. I don't think you are an undercover agent, but you got a little too loose lipped. So while I am not...
To continue reading
Request your trial