United States v. Hosseini
| Decision Date | 07 May 2012 |
| Docket Number | No. 08-1879,No. 08-1880,08-1879,08-1880 |
| Parties | UNITED STATES OF AMERICA, Plaintiff-Appellee, v. AMIR HOSSEINI and HOSSEIN OBAEI, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 05 CR 254—Milton I. Shadur, Judge.
Before SYKES, TINDER and HAMILTON, Circuit Judges.
SYKES, Circuit Judge. Amir Hosseini and Hossein Obaei operated three automobile dealerships in Chicago, and from 1995 to 2005, sold many luxury cars to Chicago-area drug dealers. Indeed, more than half their sales during this period were to drug traffickers, who preferred to deal with Hosseini and Obaei because they were willing to accept large cash payments in small bills with no questions asked. They also falsified sales contractsand liens, ignored federal tax-reporting requirements, and arranged their bank deposits to avoid triggering federal bank-reporting requirements. Based on this activity and more, Hosseini and Obaei were charged in a massive 100-count indictment alleging RICO conspiracy, money laundering, mail fraud, illegal transaction structuring, bank fraud, and aiding and abetting a drug conspiracy. After a five-week trial, a jury convicted on 97 counts (three were dismissed before trial), and the district court imposed long prison terms.
Hosseini and Obaei appealed, raising a host of challenges to the district court's management of the trial and the sufficiency of the government's evidence on some of the counts of conviction. Regarding the money-laundering counts in particular, they raised a legal question left open by the Supreme Court's splintered decision in United States v. Santos, 553 U.S. 507 (2008): In a traditional money-laundering case—where the indictment alleges that the defendant engaged in specified financial transactions for the purpose of concealing the proceeds of criminal activity or avoiding a state or federal reporting requirement (as opposed to promoting the underlying crime)—must the government prove that the laundered "proceeds" are the net profits or simply the gross receipts of the underlying crime?
That question remains unresolved in this circuit. See United States v. Aslan, 644 F.3d 526, 550 (7th Cir. 2011). But the defendants raised it for the first time on appeal, so we review only for plain error, and the unsettled state of the law means that the claimed error is not plain.Moreover, there is no reason for us to ultimately decide the matter here; after the defendants' trial, Congress amended the money-laundering statute, using the broader "gross receipts" definition of "proceeds." See 18 U.S.C. § 1956(c)(9). Finally, because the evidence is sufficient to support the jury's verdict and the other claims of error are meritless, we affirm.
Hosseini and Obaei each owned a used-car dealership in Chicago, and together they owned a third. The evidence at trial established that they jointly operated all three dealerships. They frequently transferred large sums of money among the three dealerships. They bought inventory together, moved vehicles around the three car lots, referred customers to each other, and pooled their employee services, financial services, and employee benefits.
They also regularly sold expensive cars to Chicago-area drug dealers, who usually paid in cash, often in small bills—tens, twenties, and fifties rubber-banded together and carried in paper or plastic bags or shoe boxes. On the occasions when they gave their drug dealer customers in-house financing, Hosseini and Obaei did not require a credit application, proof of legitimate income, or other normal financial paperwork. They doctored sales contracts by changing purchase prices and Social Security numbers, and often used the names of straw purchasers. They routinely failed tofile the forms required by the IRS when a customer pays $10,000 or more in cash. They placed false liens on vehicles, which (among other things) allowed the dealerships to claim ownership and recover the vehicles if they were seized by law enforcement, and also enabled the drug dealers to trade in the vehicles for new cars.
Although Hosseini and Obaei frequently received large payments in cash, they arranged their bank deposits to avoid depositing more than $10,000 in cash in any single transaction, which would have triggered an obligation on the bank's part to report the cash transaction to the federal government. Prosecutors presented evidence that on at least 51 days, Hosseini and Obaei made deposits totaling more than $10,000 but divided the total among separate transactions to make sure that no single deposit exceeded the $10,000 threshold. For example, on a single day, Hosseini made six deposits of between $9,180 and $9,815 at the same bank. On another occasion he deposited $9,750 and $9,810 at the same bank in two transactions that occurred only five minutes apart. Likewise, on another day Obaei deposited a total of $14,500 in two separate transactions, 15 minutes apart, at the same bank.
This course of conduct stretched from 1995 to 2005 and involved millions of dollars in laundered drug money. In a 100-count indictment, the government charged Hosseini with RICO conspiracy, 18 U.S.C. § 1962; six money-laundering counts, 18 U.S.C. § 1956; 51 counts of structuring transactions to avoid reporting require-ments, 31 U.S.C. § 5324; and four counts of mail fraud, 18 U.S.C. § 1341. Obaei was charged with RICO conspiracy; aiding and abetting a drug-trafficking conspiracy, 21 U.S.C. § 846; seven money-laundering counts; 30 counts of structuring; three counts of bank fraud, 18 U.S.C. § 1344; and four counts of mail fraud. Two of the money-laundering counts and one structuring count were dismissed before trial, and the jury convicted the defendants on the remaining 97 counts. Hosseini was sentenced to 240 months in prison; Obaei received a 180-month sentence. The district court also ordered all three dealerships forfeited. The defendants timely appealed.1
On appeal Hosseini and Obaei raise a multitude of issues, the most prominent of which concerns the meaning of "proceeds" in the money-laundering statute. They also challenge the district court's denial of their severance motion, the court's handling of voir dire, two evidentiary rulings made during the trial, and the sufficiency of the evidence on a number of counts.
Hosseini and Obaei first argue that to convict them of money-laundering, 18 U.S.C. § 1956(a), the government was required to prove that they engaged in the specified financial transactions for the purpose of laundering the "proceeds" of some underlying crime, and that in this context, "proceeds" means net profit of the underlying crime, not gross receipts. Their argument is styled as a challenge to the sufficiency of the evidence. They contend that the government did not prove that the auto sales in question involved the net profit of the underlying drug trafficking. They point to evidence that some of the drug dealers used the vehicles they purchased from Hosseini and Obaei in furtherance of their drug-trafficking activities. This evidence, they contend, suggests that the car payments were "business expenses," not the net profits of the drug trade.
This argument about the meaning of "proceeds" in the money-laundering statute is new on appeal. To preserve a challenge to the sufficiency of the evidence, a defendant must move for a judgment of acquittal in the trial court. United States v. Tavarez, 626 F.3d 902, 906 (7th Cir. 2010). Both defendants did so here; they moved for judgment of acquittal under Rule 29 of the Federal Rules of Criminal Procedure at the close of the government's case, and they renewed their motions at the close of evidence and again after the verdict. But they never raised the "proceeds" issue; instead, theirRule 29 motions identified other grounds for acquittal. See Fed. R. Crim. P. 29 (). For example, they argued that selling cars to drug dealers was not evidence of a RICO enterprise or a RICO or money-laundering conspiracy. Obaei also argued that the evidence was insufficient to find him guilty of aiding and abetting a drug conspiracy.
A defendant's choice to raise specific arguments and omit others in a Rule 29 motion has consequences on appeal. We have held that when a defendant challenges the sufficiency of the evidence by motion for judgment of acquittal and makes specific arguments in support of that motion, any arguments omitted are thereby forfeited. See United States v. Groves, 470 F.3d 311, 324 (7th Cir. 2006) (). We might alternatively construe the "proceeds" argument as a claim of instructional error. But neither defendant raised the definition of "proceeds" as a ground of objection to the jury instructions.
Accordingly, our review is only for plain error. Aslan, 644 F.3d at 540. "[T]o reverse for plain error, we must find (1) error (2) that is plain, and (3) that affects the defendant's substantial rights." Id. (citing United States v. Olano, 507 U.S. 725, 732 (1993)). If the defendantcarries his burden on these points, the decision "whether to correct the error is discretionary; we will do so only if it seriously affected the fairness or integrity of the proceedings." United States v. Robinson, 663 F.3d 265, 268 (7th Cir. 2011).
The federal money-laundering statute provides in relevant part:
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