United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 4, 2008 Decided January 23, 2009
No. 07-3021
UNITED STATES OF AMERICA,
APPELLEE
v.
KESETBRHAN M. KELETA,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 05cr00371-01)
Tony Axam Jr., Assistant Federal Public Defender, argued
the cause for appellant. With him on the briefs was A. J.
Kramer, Federal Public Defender.
Leslie Ann Gerardo, Assistant U.S. Attorney, argued the
cause for appellee. With her on the brief were Jeffrey A. Taylor,
U.S. Attorney, and Roy W. McLeese III, Florence Pan, and Jay
I. Bratt, Assistant U.S. Attorneys.
Before: SENTELLE, Chief Judge, and HENDERSON, Circuit
Judge, and WILLIAMS, Senior Circuit Judge
Opinion for the Court filed by Chief Judge SENTELLE.
2
Dissenting opinion filed by Senior Judge WILLIAMS.
SENTELLE, Chief Judge: Kesetbrhan M. Keleta was
convicted of operating a money-transmitting business without a
license, in violation of 18 U.S.C. § 1960. He was sentenced
pursuant to United States Sentencing Guidelines §§ 2S1.3 and
2B1.1. At sentencing, the district court denied reduction of
Keleta’s sentence in accordance with § 2S1.3(b)(3), a “safe
harbor” provision permitting a sentence reduction when
specified conditions are met. On appeal he argues that his
sentence pursuant to Sentencing Guidelines §§ 2S1.3 and 2B1.1
was unreasonable, that the district court erred in denying him
safe harbor, and that his counsel was ineffective for failing to
object to alleged shifts in burdens of proof and for failing to
present safe harbor evidence.
Because we conclude that Keleta’s sentence was reasonable,
that there was no error in denying him safe harbor, and that his
attorney was not ineffective, we affirm the judgment of the
district court.
Background
The Embassy of Eritrea established a money-transmitting
business in Washington, D.C., in the mid-1990s to enable
Eritrean citizens living in the United States to send money back
to Eritrea. In August 2000, the business was taken over by a
company called “Himbol Financial Services.” Himbol enabled
customers to send money not only to Eritrea but also to Eritrean
nationals in other parts of the world. In 2001 Himbol hired the
appellant, Kesetbrhan M. Keleta, to manage the business. One
of his duties was to obtain a license for the money-transfer
business. He filed a license application, which was pending
between May 2001 and February 2002. Keleta left Himbol’s
employ at the end of 2002. In October 2005, he was charged
3
with two counts of violating 18 U.S.C. § 1960, which prohibits
conducting, controlling, managing, supervising, or directing an
unlicensed money-transmitting business. The first count related
to conduct occurring between March 2001 and October 25,
2001. Reflecting amendment of the statute on October 26, 2001,
the second count related to conduct occurring between October
26, 2001, and September 2002. Following a jury trial, Keleta
was convicted on both counts.
The district court sentenced Keleta pursuant to § 2S1.3
(a)(2) of the United States Sentencing Guidelines (“USSG” or
“Guidelines”). That section provides for a base offense level of
6 plus additional levels “corresponding to the value of the
funds.” Those additional levels are to be determined using the
table in § 2B1.1 of the Guidelines, with increased levels
depending upon the “loss” incurred. The government offered
evidence that, during the time of alleged illegal conduct, Keleta
had sent or authorized over $10 million in wire transfers. This
amount under § 2B1.1 resulted in an enhancement of 20 levels,
bringing Keleta’s base offense level to 26. Keleta argued to the
district court that there was no basis for using the table in §
2B1.1 because there was no “loss” in his case. The district court
disagreed, stating that loss to a victim was not an issue in
punishing violations of 18 U.S.C. § 1960, which were “more
akin to money laundering.” The district court noted that the
Guidelines range at this point was 63 to 78 months.
The court also considered whether USSG § 2S1.3 (b)(3), the
so-called “safe harbor” provision, applied. Under that provision,
if the defendant did not act with reckless disregard of the source
of the funds, the funds were the proceeds of lawful activity, and
the funds were to be used for a lawful purpose, then the base
offense level was to be decreased back to 6. The court found,
however, that Keleta did not meet any of these criteria and
therefore denied him a sentence reduction under the “safe
4
harbor” provision.
The court gave Keleta a 3-level reduction for acceptance of
responsibility as well as an additional 2-level reduction for
mitigating circumstances, including Keleta’s belief that he
would receive some protection from the Eritrean Embassy for
his involvement with Himbol, as well as Keleta’s belief that he
thought he was helping his country and those who lived there.
His base offense level was therefore 21, with a corresponding
sentencing range of 37 to 46 months. The court then subtracted
six months, for Keleta’s status as a deportable alien, from the
bottom of the range. His final sentence was therefore 31
months.
Discussion
Keleta now appeals his sentence, arguing that it was
unreasonable, that the district court improperly denied him the
benefit of the safe harbor provision, and that his lawyer at
sentencing was ineffective.
Unreasonable sentence
Keleta was convicted of violating 18 U.S.C. §
1960(b)(1)(A) and (B). In determining Keleta’s base offense
level for sentencing, the district court applied USSG §
2S1.3(a)(2). That section calls for a base offense level of “6
plus the number of offense levels from the table in § 2B1.1 . . .
corresponding to the value of the funds.” Because there was
testimony presented at trial that the value of the funds
transferred by Keleta was approximately $10 million, Keleta’s
offense level under the table in § 2B1.1(b)(1) was increased by
20 points. USSG § 2B1.1(b)(1)(K). Keleta objected to any
increase under § 2B1.1(b)(1), noting that that section
specifically refers to increases in the offense level for specific
5
amounts of “loss” and there was no loss involved in the funds he
had transferred. At the sentencing colloquy the district court
rejected Keleta’s argument, stating:
Loss to a victim is not a requirement. Loss is clearly
not an issue in these 1960 transaction[s]. They are
more akin to money laundering. And the table in
[§]2B1 is used really only to indicate the levels to be
increased by the funds.
Keleta’s primary focus on this appeal is the district court’s
“akin to money laundering” statement. That statement shows,
he argues, that the court’s rationale for using the value of the
transferred funds to increase his sentence was to equate his
crime to money laundering. But, he asserts, money laundering
was not a part of the nature and circumstances of his crime,
contending that money laundering is “a specific intent crime”
and the subsections of 18 U.S.C. § 1960 under which he was
convicted have a much narrower focus than general money
laundering statutes. He asserts that those subsections were
enacted to punish businesses that fail to register, not to punish
the actual transfer of money. He further asserts that in 2001
Congress amended 18 U.S.C. § 1960 to add a provision for
punishing money laundering, subsection (b)(1)(C), and that this
addition indicates that Congress did not intend to use the
licensing and registration provisions of the subsections he was
convicted under–i.e., (b)(1)(A) and (b)(1)(B)–to punish
defendants for the value of the funds transferred.
Given his individual facts and circumstances, Keleta argues
that his sentence was not reasonable. He notes that in United
States v. Booker, 543 U.S. 220 (2005), the Supreme Court
directed sentencing courts to consider the factors set forth in 18
U.S.C. § 3553(a) in addition to any applicable Guidelines, and
that among those factors are the nature and circumstances of the
6
offense. Keleta claims that here the district court explicitly
adopted the rationale that the nature and circumstances of his
offense involved money laundering and the court thus
incorporated the value of the funds from the table in § 2B1.1 in
determining his base offense level. He asserts that the value of
the funds he transferred had no relationship to the individual
nature and circumstances of his crime of operating an unlicensed
money-transmitting business. Consequently, he claims that any
increase to his sentence based upon the value of the transferred
funds was unreasonable.
Responding to Keleta’s claim, the government contends that
the district court in fact did not increase his sentence because of
a presumption of money laundering. The government asserts
that the district court’s “akin to money laundering” remark was
not a factual finding but rather was made in response to an
argument raised by Keleta, and was only intended to explain
why the table in § 2B1.1 is incorporated into § 2S1.3 when there
is no loss to a victim. The government further argues that §
2S1.3 establishes a sentencing scheme for unlicensed money
transmission which does not require proof that the monies
involved in the offense be classified as laundered funds. The
government finally contends that the district court did not
assume that Keleta had engaged in money laundering, and that
in fact the court discussed at sentencing the lack of evidence that
Keleta was involved in funding terrorism and other illegal
enterprises.
Regardless of the district court’s use of the term “akin to
money laundering,” its calculation of Keleta’s base offense level
was correct. In Gall v. United States, 128 S.Ct. 586, 596 (2007),
the Supreme Court explained that “a district court should begin
all sentencing proceedings by correctly calculating the
applicable Guidelines range.” As the government notes, USSG
§ 2S1.3, under which Keleta was sentenced, prescribes the very
7
methodology employed here by the district court: the
commentary to that section references its application to
violations of 18 U.S.C. § 1960(b)(1)(A) and (B), under which
Keleta was convicted. The base offense level is to be calculated
under § 2S1.3(a)(2) by adding “the number of offense levels
from the table in § 2B1.1 . . . corresponding to the value of the
funds.” In the Application Notes to § 2S1.3, “value of the
funds” is defined as “the amount of the funds involved in the
structuring or reporting conduct. The relevant statutes require
monetary reporting without regard to whether the funds were
lawfully or unlawfully obtained.” In U.S. v. Abdullahi, 520 F.3d
890 (8th Cir. 2008), the defendant was also sentenced for, inter
alia, operating an unlicensed money transmitting business in
violation of 18 U.S.C. § 1960(b)(1)(A) and (B). The Eighth
Circuit recited the sentencing scheme established by §
2S1.3(a)(2), and then noted that the defendant’s base offense
level was increased, as here, by the amount of funds involved in
the unlicensed money transmitting business. Id. at 896 n.7. We
agree with the approach of the Eighth Circuit. The sentencing
scheme established by § 2S1.3(a)(2) does not require proof that
the monies involved in the offense were themselves the product
of illegal activity, were being transmitted for illegal means, or
could be classified as laundered funds. We conclude that the
district court correctly applied the Guidelines. “[A] sentence
within a properly calculated Guidelines range is entitled to a
rebuttable presumption of reasonableness.” United States v.
Dorcely, 454 F.3d 366, 376 (D.C. Cir. 2006). Keleta has not
met his burden of rebutting the presumption of reasonableness
in the district court’s sentence.
Safe harbor provision
As noted above, during sentencing Keleta was sentenced
pursuant to USSG § 2S1.3(a)(2), which provides for a base level
of 6 plus the appropriate enhancement from the table in § 2B1.1.
8
Also provided for in § 2S1.3 is subsection (b)(3), the so-called
“safe harbor” provision, which states the following:
If (A) subsection (a)(2) applies and subsections (b)(1)
and (b)(2) do not apply; (B) the defendant did not act
with reckless disregard of the source of the funds; (C)
the funds were the proceeds of lawful activity; and (D)
the funds were to be used for a lawful purpose,
decrease the offense level to level 6.
The safe harbor provision essentially permits the district
court to disregard the value of the funds involved in the offense
and return the offense level to 6 when specified circumstances
exist. In order for Keleta to benefit from the safe harbor
provision, he was required to prove that he did not act with
reckless disregard of the source of the funds being transferred,
that the funds were the proceeds of lawful activity, and that the
funds were to be used for a lawful purpose. Keleta argues that
the district court erred in denying him safe harbor when it found
the safe harbor provision inapplicable because he failed to prove
that he met the provision’s requisites. In doing so Keleta claims
that the court operated under a presumption that the funds he
transferred were related to money laundering, and he claims that
because neither the crime he was convicted of nor the trial
evidence supported a presumption that the funds were related to
an unlawful source, activity, or purpose, the burden was on the
government at sentencing to prove criminal acts that would
support this presumption. He consequently argues that the
district court erred when it relieved the government of this
burden and instead shifted it to him. We disagree.
As Keleta admits, under United States v. Burke, 888 F.2d
862, 869 n.10 (D.C. Cir. 1989), the government bears the burden
of proof in seeking sentencing enhancements under the
Guidelines, but the defendant bears the burden in seeking
9
sentencing reductions. The safe harbor provision of USSG §
2S1.3 provides a possible sentencing reduction, and therefore it
is the defendant’s burden to prove that he is entitled to that
reduction. In United States v. Abdi, 342 F.3d 313 (4th Cir.
2003), the defendants also claimed that they were entitled to the
benefit of the reduction of the safe harbor provision. The Fourth
Circuit succinctly stated that “in order to benefit from the safe
harbor provision, the defendants must carry the burden of
showing that the funds were derived from lawful activity and
were to be used for lawful purposes.” Id. at 317. We agree. It
was Keleta’s burden to prove that he was entitled to the
sentencing reduction of the safe harbor provision, and the
district court did not err in failing to shift the burden to the
government to prove otherwise.
Ineffective assistance of counsel
Keleta argues that his attorney’s representation of him at
sentencing was ineffective. Under Strickland v. Washington,
466 U.S. 668, 687-88 (1984), an attorney is ineffective if, first,
his performance fell below an objective standard of
reasonableness, and, second, the deficiencies in his
representation were prejudicial to his defense. First, Keleta
argues that his counsel was ineffective for failing to object to the
shift in the burden of proof requiring him to disprove that he
laundered money, and for failing to object when the burden of
proof was shifted to him to prove that his behavior fell within
the safe harbor. He claims that if his attorney had argued that
these burdens of proof were improperly allocated, the
government would have had to present evidence in support of
the separate criminal acts implied by the Guidelines and the only
appropriate outcome would have been for the court to impose a
lower sentence. As we already discussed, the burden to prove
his eligibility for the safe harbor was in fact Keleta’s.
Consequently, Keleta’s attorney was not ineffective for failing
10
to make these objections.
Second, Keleta argues that his counsel was ineffective for
failing to present evidence during sentencing to satisfy the safe
harbor provision of § 2S1.3(b)(3). He claims that there was no
strategic reason not to present such evidence, and that since he
met all of the requirements of the safe harbor provision, he
would have been given a shorter sentence had his attorney
presented such evidence. In order to show that he has met the
prejudice standard of Strickland, Keleta “must show that there
is a reasonable probability that, but for counsel’s unprofessional
errors,” his sentence would have been different. 466 U.S. at
694. Although Keleta did not raise the safe-harbor issue with
the district court, the government presented it in its sentencing
memorandum. The district court then addressed the issue during
the sentencing colloquy, discussing whether Keleta met the
criteria of § 2S1.3(b)(3). Of the four criteria listed, the court
found that Keleta could not meet three of them. The court stated
that Keleta acted with reckless disregard of the source of the
funds, and that there was no way to determine whether the funds
were the proceeds of lawful activity or were to be used for a
lawful purpose, because Himbol did not have in place a control
system to verify the nature or source of the transferred funds and
there was no information on who received the funds or the
purpose of the transfer.
Keleta argues, however, that the district court erred in
finding that he did not meet the criteria because the court used
the wrong standard in determining that he acted with reckless
disregard of the funds, controls tracking the funds were in fact
in place, the business was established by and operated through
the Embassy of Eritrea, it operated openly, and the funds were
meant to help people back in Eritrea. Because these specific
claims raised by Keleta were not presented to the district court,
we will review them only for plain error. Under that standard
11
the district court’s error must be “obvious.” See United States
v. Bolla, 346 F.3d 1148, 1152-53 (D.C. Cir. 2003). After review
of the district court’s findings and consideration of Keleta’s
arguments, we do not find any obvious errors in the district
court’s determination that he failed to meet the criteria of §
2S1.3(b)(3).
We conclude that even if Keleta’s attorney had presented
evidence concerning the criteria of the safe harbor provision,
there is no “reasonable probability” that the district court would
have given Keleta a different sentence. On the record and
argument before us, we cannot conclude that Keleta’s counsel
could have offered evidence to meet the criteria of the safe
harbor provision so as to entitle Keleta to the reduction provided
by that provision. He has shown us nothing to support a
reasonable probability that the district court would have found
controls establishing lawful origin of the funds, or that the
purpose of aiding Eritrean citizens was ultimately for assisting
lawful activities of those citizens, as opposed to unlawful ones.
In short, there is no “reasonable probability” that a more
thorough and aggressive counsel could have convinced the court
to sentence any differently than it did. Keleta’s attorney was
therefore not ineffective for failing to present such evidence.
Conclusion
The judgment of the district court is affirmed.
WILLIAMS, Senior Circuit Judge, dissenting: In
reviewing sentences for reasonableness, one of our first tasks
is to make sure the district court did not “improperly
calculat[e] the Guidelines range.” Gall v. United States, 128
S. Ct. 586, 597 (2007). Here the district court added 20 levels
to Keleta’s base offense level, bringing it to 26, in what seems
to me a clear misapplication of the pertinent guideline, U.S.
Sentencing Guidelines (“USSG”) § 2S1.3(a)(2). Accordingly,
I would reverse and remand for resentencing.
Section 2S1.3(a)(2) states that the base offense level for a
variety of crimes, including the offenses of conviction here
(18 U.S.C. § 1960), shall be “6 plus the number of offense
levels from the table in § 2B1.1 . . . corresponding to the value
of the funds.” Application Note 1 defines the term “value of
the funds” as “the amount of the funds involved in the
structuring or reporting conduct.” § 2S1.3 application n.1
(emphasis added). The conduct for which Keleta was
convicted—managing an “unlicensed money transmitting
business”—involves neither “structuring” nor “reporting.”
Those offenses are covered by other statutes to which § 2S1.3
applies. See, e.g., 31 U.S.C. §§ 5313 (reporting), 5324
(structuring). Keleta, however, was not charged with, much
less convicted of, failing to report financial transactions or
structuring transactions to evade reporting requirements. As
the term is properly understood, therefore, the “value of the
funds” involved in his offense is zero, with a resulting base
offense level of 6 and an advisory sentencing range of zero to
six months (much lower than the 63–78-month range
corresponding to offense level 26 or even Keleta’s actual
sentence of 31 months).
No published opinion in our circuit or elsewhere has dealt
with the application of USSG § 2S1.3(a)(2) to § 1960. United
States v. Abdullahi, 520 F.3d 890, 896 n.7 (8th Cir. 2008),
applied the table to funds transmitted through an unlicensed
2
money transmitting business, but did not discuss or explain
how such conduct could be said to involve either “structuring”
or “reporting.” One unpublished district court opinion, United
States v. Bariek, No. 05-150, 2005 WL 2334682, at *2 (E.D.
Va. Sept. 23, 2005), applied the table to a licensing offense,
reasoning that the application was correct because the
Sentencing Commission listed § 1960 among the offenses
addressed by § 2S1.3. Id. But this evades the question: Did
the Commission mean for the increment based on the amount
of funds to apply to § 1960 offenses? The Commission could
easily have intended that such offenses be assigned a uniform
offense level of 6; otherwise, why limit amount-based
increases to “the funds involved in the structuring or reporting
conduct”?
The court in Bariek also argued that “it would be illogical
to penalize unlicensed money transmitters without regard to
the amount of money they transmitted.” Id. In a vague sense
the argument has some merit: the more money an unlicensed
business transmits, the higher the odds of some of the
transmissions defeating some public interest, such as the
policies trying to thwart the financial activities of terrorist
organizations. But the link is far more attenuated than the one
between such risks and a failure to report a financial
transaction—or structuring to avoid reporting—which directly
undermines the government’s ability to track the money.
Treasury regulations identify types of transactions required to
be reported, obviously the ones perceived as posing the
greatest risks, but the government neither charged nor proved
a violation of any of those provisions. In its brief here the
government claimed that 31 C.F.R. § 103.20 (promulgated
pursuant to 12 U.S.C. §§ 1829b, 1951–59; 31 U.S.C.
§§ 5311–14, 5316–32) required reporting of Keleta’s
transactions, but in oral argument it acknowledged that the
facts shown satisfied none of § 103.20’s provisions.
Reporting requirements simply do not track licensing
3
requirements. Thus, equating failure to secure a license with
failure to report misses the obvious difference in the
likelihood of harm resulting from each offense. The language
of § 2S1.3 does not equate the two; it makes complete sense.
We should follow it.