USA v. Monaco and Demaio
| Decision Date | 01 August 1998 |
| Docket Number | No. 932,Docket No. 98-1386,932 |
| Citation | 194 F.3d 381 |
| Parties | (2nd Cir. 1999) UNITED STATES OF AMERICA, Appellee, v. JAMES V. MONACO, MARY E. MONACO, aka Mary Young, DAVID J. MONACO, LINDA DEMAIO, and MICHAEL DEMAIO, aka Mickey, Defendants-Appellants. (Lead), 98-1387, 98-1399, 98-1400, 98-1401(Con)-- |
| Court | U.S. Court of Appeals — Second Circuit |
Appeal from judgments of conviction, after jury trial, in the United States District Court for the District of Connecticut (Thompson, J.).
The appeal is dismissed in part, and the judgment of the district court is affirmed in remaining part.
Jeremiah Donovan, Old Saybrook, CT, for Defendant-Appellant James V. Monaco.
WILLIAM T. KOCH, JR., Lyme, CT, for Defendant-Appellant Mary E. Monaco.
SUZANNE L. MCALPINE, New Haven, CT (Hugh F. Keefe, Lynch, Traub, Keefe & Errante, on the brief) for Defendant-Appellant David J. Monaco.
JON L. SCHOENHORN, Hartford, CT (Schoenhorn & Associates on the brief), for Defendant-Appellants Linda and Michael DeMaio.
MARK G. CALIFANO & JEFFREY A. MEYER, Assistant United States Attorneys, New Haven, CT (Stephen C. Robinson, United States Attorney for the District of Connecticut, on the brief), for Appellee.
Before: WINTER, Chief Judge, JACOBS, Circuit Judge, and SWEET,1 District Judge.
The five appellants, all related by blood or marriage, were convicted after a jury trial in the United States District Court for the District of Connecticut (Thompson, J.) of various money-laundering offenses. At trial, the government demonstrated that over the course of many years the group had laundered money for another family member, Jimmy Monaco, a Florida-based drug trafficker and pirate. Among other actions, family members stored Jimmy's assets, keeping them available to meet his expenses, and acted as nominee owners of his real and personal property.
On appeal, appellants raise numerous challenges to their convictions and sentences, most of which are rejected in an unpublished summary order also released today. See United States v. Monaco, No. 98-1386 (2d Cir. 1999). In this opinion, we address the three claims that merit extended discussion.
(1) The defendants argue that the money laundering statute, 18 U.S.C. 1956, which prohibits certain "transactions" involving "the proceeds of some form of unlawful activity" (emphasis added), does not apply to "transactions" involving "proceeds" that were illegally generated before the October 27, 1986 effective date of the act, even if the "transactions" occurred after the effective date. They contend that any other reading of the act would render it void for vagueness, or would run afoul of the Ex Post Facto clause of the Constitution. We disagree. The term "proceeds of some form of unlawful activity" includes "proceeds" that were generated by illegal activity before enactment of the statute. Assets are illegal proceeds from the time they are realized in an illegal transaction. No vagueness problem is created because the statute clearly describes the kind of asset that is the subject of the prohibition. The evidentiary ruling admitting evidence of money laundering prior to October 1986 did not violate the Ex Post Facto clause, because that evidence was admissible to show the operation of the charged conspiracy, which began before enactment of 1956 and continued afterwards.
(2) Defendants challenge the admission of evidence showing that their expenditures far outpaced their reported income, and argue that the government was required to make a preliminary showing of the defendants' "baseline" net worth. We conclude that such a predicate showing is required only in certain tax prosecutions.
(3) Finally, we dismiss Michael DeMaio's challenge to his fine, which falls within the applicable guideline range for his offense.
The evidence at trial was voluminous, and we summarize here only the facts needed to consider the issues decided in this opinion. "Because defendants appeal their convictions after a jury trial, our statement of the facts views the evidence in the light most favorable to the government, crediting any inferences that the jury might have drawn in its favor." United States v. Salameh, 152 F.3d 88, 107 n.1 (2d Cir. 1998) (per curiam), cert. denied, 119 S.Ct. 885 (1999).
Jimmy Monaco, a native of Connecticut, moved to Florida in 1970, where he conducted a lucrative drug distribution and piracy operation. He enlisted each of the following family members to launder the proceeds: James and Mary Monaco (his parents), David J. Monaco (his brother), Linda and Michael DeMaio (his sister and brother-in-law), and Kenneth Rohlman (his brother-in-law). Rohlman appeared as a cooperating government witness at trial. The other relatives are defendants-appellants.
Jimmy was arrested and imprisoned on narcotics charges off and on throughout the course of the conspiracy; he has remained in prison since 1989, when he began serving a lengthy sentence. According to Rohlman, Jimmy's various criminal enterprises were topics of conversation at numerous family gatherings at which the appellants were all present.
The numerous transactions shown by the government fall into two broad classes: (i) transportation of Jimmy's money to Connecticut and its retention by family members, in the form of various assets, for use in meeting Jimmy's expenses; and (ii) nominee ownership of property intended to mask Jimmy's ownership of it. The evidence came principally from Rohlman, whose testimony was frequently corroborated with documentary and other evidence.
During the 1970s, Rohlman and James Monaco made numerous trips to Florida, coming back each time with large quantities of Jimmy's cash, sometimes hidden in the lining of a trench coat. According to Rohlman, Michael DeMaio recalled he and David Monaco had flown back from Florida in a Lear jet full of cash from Jimmy.
James and Mary buried some of the money in their back yard. David stored some of the money in his house and garage. James, Mary, David, and Linda stored cash in safe deposit boxes. More than $400,000 in cash was deposited in more than 90 accounts that the defendants maintained at 13 Connecticut banks, multiple deposits often being made to different accounts on the same day. (On some of David Monaco's deposit slips, he noted "Jim's money.") James Monaco used some of Jimmy's money to finance construction of the DeMaios' house in Middlefield; when the DeMaios made mortgage payments to James (out of an account that had seen large cash deposits), James deposited the funds in an account he used to pay Jimmy's expenses. This arrangement was typical of the defendants' recycling of Jimmy's money to meet his Florida expenses.
On several occasions, the defendants made cash deposits to their bank accounts just before writing a check in the same amount to meet Jimmy's expenses. Among other expenses incurred by Jimmy, family members paid his legal bills, the upkeep of his properties in Florida, his mortgage, and the docking fees for his boat.
The defendants acted as nominee owners of various properties of which Jimmy was owner in all but name:
. In the 1970s and 1980s, Jimmy lived in a house in Dania, Florida. However, James Monaco was formally the property's owner; James told Rohlman that Jimmy had proposed this arrangement because it would be difficult for Jimmy to explain owning such a house when he had no job.
. James and Mary Monaco held the deed of a mansion in Deerfield, Florida. At the closing in 1987, they paid $132,000 for the house out of an account into which they had previously made large cash deposits. James and Mary told Rohlman that they had made an additional $300,000 cash payment "under the table." Jimmy used the mansion to meet with his fellow drug traffickers and to store cash, equipment, cars, and his yacht.
. David Monaco was the owner of a warehouse in Pompano Beach, Florida, that Jimmy used to store drugs, cars and automobile-related equipment. David denied knowing that he was the owner of record, yet documents related to it were found in his home, and he handled the remediation of code violations in 1991.
. Linda and Michael DeMaio owned a house in Miramar, Florida, and James Monaco managed it and paid its expenses. When the house was sold in 1989, Linda and Michael received a proceeds check for nearly $33,000, and immediately cross-endorsed it to James, who then deposited it into an account from which he paid Jimmy's legal expenses.
The co-defendants make several tightly related arguments, all based on the (undefined) term "proceeds" in the federal money laundering statute, which states in relevant part:
(a)(1) Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity--
(ii) with intent to engaged in [tax evasion or fraud]; or
(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or
(ii) to avoid a transaction reporting requirement under State or Federal law
shall be sentenced [to a fine, imprisonment, or both].
18 U.S.C. 1956 (emphases added).
The defendants contend (i) that the statute should not be read to reach any post-enactment conduct related to "proceeds" that were generated before the statute's enactment date of October 27, 1986, but (ii) to the extent that the statute does purport to reach such conduct, that it is void for vagueness, or, in the alternative, violative of the Ex Post Facto clause of the Constitution.
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