United States v. Takhalov

Money Laundering / Reversal of Conviction on the SUA

Stefan Cassella of Asset Forfeiture Law, LLC comments on United States v. Takhalov, a recent appeal which held that a defendant may not be convicted of fraud merely because he deceives another to cause him to engage in a transaction, if the transaction otherwise provides the customer with exactly what he paid for.

Where it is uncertain that a jury properly instructed on the SUA (specified unlawful activity) offense would have found that that offense actually occurred, reversal of the conviction on the underlying SUA requires reversal of the money laundering conviction as well.

United States v. Takhalov, ___ F.3d ___, 2016 WL 3683456 (11th Cir. July 11, 2016). Eleventh Circuit

Defendants employed attractive young women to pose as tourists to induce men to buy them drinks at Defendants’ bar. They were convicted of wire fraud and of laundering the proceeds of that offense.

On appeal, the panel reversed the wire fraud convictions, holding that a defendant may not be convicted of fraud merely because he deceives another to cause him to engage in a transaction, if the transaction otherwise provides the customer with exactly what he paid for (in this case, expensive drinks at a bar). It is true, the court said, that there was other evidence in the case that Defendants actually engaged in fraudulent transactions (e.g., switching the prices on the drinks after they were ordered), but because the trial judge failed to instruct the jury that the use of deception alone to induce a person to enter into a transaction (the women were not really tourists) is insufficient to support a wire fraud conviction, the convictions could not stand.

The court then turned to the money laundering convictions. It held that because it “could not be sure that a properly instructed jury would have found that the specified unlawful activity of wire fraud actually occurred,” it could not be sure beyond a reasonable doubt that such a jury would have convicted Defendants of money laundering. Accordingly, the court held that the money laundering convictions had to be reversed as well.

Comment

The court does not explain why a man is more likely to buy an attractive young woman a drink if he thinks that she is a tourist rather than an employee of the bar, but presumably the reader is able to figure that out.

With respect to the money laundering convictions, there is a great deal of case law holding that the reversal of the conviction for the underlying SUA does not necessarily require the reversal of a money laundering conviction.  Those cases, however, generally involve a situation in which the jury could have found that the property being laundered was the proceeds of a different SUA (e.g., a substantive wire fraud transaction other than the one charged in the indictment), or that the SUA was committed by someone other than the defendant whose conviction was reversed. See, e.g., United States v. Tencer, 107 F.3d 1120, 1130-31 (5th Cir. 1997) (acquittal on particular mail fraud counts did not require acquittal on money laundering where jury could have found that property being laundered was proceeds of other parts of the fraud scheme); United States v. Magluta, 418 F.3d 1166, 1174 (11th Cir. 2005) (defendant’s acquittal in separate drug prosecution does not estop Government from using same drug offenses to prove the proceeds element of money laundering; jurors may have acquitted defendant because they believed someone else committed the drug offenses).

But a money laundering conviction cannot stand if the jury may have – or should have — found that the underlying SUA did not occur at all. See United States v. Truesdale, 152 F.3d 443, 449 (5th Cir. 1998) (money laundering convictions must be reversed if they require proof that money was proceeds of gambling scheme in violation of section 1955 and the section 1955 conviction is reversed for lack of proof that there was any violation of that statute); United States v. Aunspaugh, 792 F.3d 1302 (11th Cir. 2015) (because the money laundering conviction was premised on defendant’s conviction for honest-services fraud, vacating the fraud conviction because the jury instruction did not comport with Skilling meant that the money laundering conviction had to be vacated as well). In the panel’s view, this case fell into the latter category.

Stefan Cassella, Asset Forfeiture Law, LLC 

www.assetforfeiturelaw.us