Wednesday, October 09, 2013

Application of Guidelines Enhancement for Sophisticated Money Laundering Was Not Error Even Though The Defendant’s Acts Were Not Those Listed in Application Note

In United States v. Fish, No. 12-3109 (3d Cir. 10/1/2013), the Third Circuit considered the application of U.S.S.G. §2S1.1(b)(3), that enhances a guidelines score by two points for sophisticated money laundering.

The appellant, Mordchai Fish, was caught up in a scandal involving charities and rabbis in the Syrian-Jewish Community in northern New Jersey.  A government informant approached Fish, a rabbi, with what he claimed were proceeds from a counterfeit handbag operation, and over time, got Fish to launder over $900,000.  Fish took the money the informant gave him and turned it over to Jewish charities and rabbis, and returned it, ostensibly free of noticeable stain, less a 10% commission. The meetings with the informant took place at various locales.  Fish gave the informant several SIM cards for his cell phone. A co-conspirator of Fish told the informant, while the scheme was active, that the money came from the diamond and jewelry business, though it did not.

Fish pled guilty to a single count of money laundering, 18 U.S.C. §1956(h). The government agreed, as part of the plea, that the applicable offense level was 21, but it was free to argue at time of sentencing for a two level enhancement under §2S1.1(b)(3). The District Court accepted the recommendation of the pre-sentence report that the enhancement apply. Fish appealed.

The first issue the Court dealt with was the standard of review of the application of §2S1.1(b)(3). Because there was no dispute over the District Court’s factual determinations, the Court reviewed the application of the enhancement for clear error.

Applying that standard, it found none.  To effect the scheme, Fish used multiple outlets for cash exchanges, multiple couriers and other participants, and multiple locations. He and his conspirator used secrecy to conceal underlying aspects of the scheme. He attempted to evade detection by the use of codes and untraceable electronic devices. Fish used multiple sources of cash to launder the money. Fish argued that none of these acts fit the examples of sophisticated money laundering described in the application note. Those factors though, the Court ruled, were merely illustrative, and not exclusive. Fish’s acts involved several types of transactions and sophisticated attempts to cover them up. The District Court did not clearly err in applying the enhancement.

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