Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit
11-14-1994
United States v. Thompson
Precedential or Non-Precedential:
Docket 94-3269
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"United States v. Thompson" (1994). 1994 Decisions. Paper 185.
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 94-3269
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UNITED STATES OF AMERICA
v.
ROSCOE B. THOMPSON,
a/k/a Rudolph Sinclair;
BENJAMIN GARLAND, II,
a/k/a James P. Morgan
ROSCOE B. THOMPSON,
Appellant
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On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Criminal No. 93-00085-1)
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Submitted under Third Circuit LAR 34.1(a)
Tuesday, October 25, 1994
BEFORE: STAPLETON, HUTCHINSON and GARTH, Circuit Judges
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(Opinion filed November 14, 1994)
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Thomas S. White
Karen Sirianni Gerlach
Michael D. Bartko
Office of Federal Public
Defender
960 Penn Avenue
415 Convention Tower
Pittsburgh, Pennsylvania 15222
Attorneys for Appellant
Frederick W. Thieman
Bonnie R. Schlueter
Michael L. Ivory
Office of United States Attorney
633 United States Post Office &
Courthouse
Pittsburgh, Pennsylvania 15219
Attorneys for Appellee
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OPINION OF THE COURT
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GARTH, Circuit Judge:
The question we must answer on this appeal is whether a
sentence for money laundering under § 2S1.1 of the Sentencing
Guidelines should be based on the total value of the funds
involved in that offense or should it be based on the actual loss
sustained by the victims. We reject Thompson's "actual loss"
argument which is based on the measurement of the sentence for
offenses involving fraud and deceit. See U.S.S.G. § 2F1.1;
United States v. Kopp, 951 F.2d 521 (3d Cir. 1991). We hold
instead that in imposing a sentence for money laundering pursuant
to U.S.S.G. § 2S1.1, the district court should determine its
sentence based on the total value of the funds involved.
I
Appellant Roscoe Thompson ("Thompson") appeals the
sentence imposed after he pled guilty to the charges of money
laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(i)1 and
conspiracy to defraud a financial institution, 18 U.S.C.
1
. 18 U.S.C. § 1956 (a)(1)(B)(i) provides as follows:
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 unspecified unlawful
activity--
. . . .
(B) knowing that the transaction is designed in
whole or in part--
(i) to conceal or disguise the nature,
location, the source, the ownership or the control of
the proceeds of specified unlawful activity, or
. . . .
shall be sentenced to a fine of not more than $500,000
or twice the value of the property involved in the
transaction, whichever is greater, or imprisonment of
not more than twenty years, or both.
§ 1344,2 in violation of 18 U.S.C. § 371.3 We have jurisdiction
pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a)(2). On
appeal, Thompson argues that the district court's calculation of
his sentence under U.S.S.G. § 2S1.1(b)(2) is inconsistent with
this Court's holding in United States v. Kopp, 951 F.2d 521 (3d
Cir. 1991).
II
The essential facts of this case are not in dispute.
Thompson, Victor Thompson ("Victor") and co-defendant Benjamin
Garland ("Garland") together intercepted and diverted funds that
investors mailed to the New York securities firm of J.P. Morgan
2
. 18 U.S.C. § 1344 provides as follows:
Whoever knowingly executes, or attempts to execute, a scheme or
artifice--
(1) to defraud a financial institution; or
(2) to obtain any of the moneys, funds, credits,
assets, securities, or other property owned by, or
under the custody or control of, a financial
institution, by means of false or fraudulent pretenses,
representations or promises;
shall be fined not more than $1,000,000 or imprisoned not more
than 30 years, or both.
3
. 18 U.S.C. § 371 provides in relevant part:
If two or more persons conspire either to commit
any offense against the United States, or to defraud
the United States, or any agency thereof in any manner
or for any purpose, and one or more of such persons do
any act to effect the object of the conspiracy, each
shall be fined not more than $10,000 or imprisoned for
not more than five years, or both.
Securities, Inc. ("J.P. Morgan"). Their plan was executed in the
following manner. During the period from July 18, 1991 through
December 2, 1991, Victor, who was a J.P. Morgan employee,
intercepted thirty-four checks sent to J.P. Morgan by various
people throughout the United States. Victor forwarded these
checks to Garland in Tarpon Springs, Florida, who mailed the
stolen checks to the appellant Thompson in Pittsburgh,
Pennsylvania.
On October 9, 1991, Thompson opened an account at
Pittsburgh National Bank (now PNC Bank) under the fictitious
business name of J.P.M. Utility Auditors, Inc. ("JPM"). Thompson
used the alias of Rudolph Sinclair to create the account. On the
same day Thompson obtained a telephone answering service in JPM's
name.
Between October 10, 1991, and December 6, 1991,
Thompson deposited thirty-four stolen checks with a total value
of $352,220.50 into JPM's checking account. The conspirators
withdrew the funds by wire transfers, checks and automatic teller
machine transactions. By means of these withdrawals, Thompson
and Garland diverted the stolen funds to a series of other
accounts with PNC Bank, Barnett Bank, Citibank and Charles
Schwab, a discount brokerage firm.
Investigators from PNC Bank became aware of these
illicit activities in January, 1992. PNC froze the funds that
remained in the accounts and thereby prevented the withdrawal of
$99,561.27 of the $352,220.50 that Thompson had stolen and
deposited. These funds were eventually returned to the J.P.
Morgan investors who were the victims of the scheme. Of the
stolen funds, $252,659.23 was not recovered.
On April 15, 1993, a federal grand jury returned an
eighty-two count indictment against Thompson and Garland.4 Under
an agreement with the Government, Thompson pled guilty to Count
One (conspiracy to defraud) and Count Fifty-One (money
laundering) of the indictment. Thompson acknowledged committing
the crimes charged in the remaining counts of the indictment, and
stipulated that the conduct alleged in the entire indictment
could be considered by the district court in imposing a sentence.
Thompson also accepted the responsibility for paying restitution
in the amount of $352,220.50.
4
. The indictment enumerated the following charges: Count One
charged the defendants with conspiracy to defraud a financial
institution in violation of 18 U.S.C. § 371; Counts Two through
Twelve charged them with possession of forged securities in
violation of 18 U.S.C. § 513; Counts Thirteen through Twenty-
Eight charged them with bank fraud in violation of 18 U.S.C. §
1344; Counts Twenty-Nine through Thirty-One charged them with
wire fraud in violation of 18 U.S.C. § 1343; Count Thirty-Two
charged Thompson with the use of a fictitious identity in
violation of 18 U.S.C. § 1342; Counts Thirty-Seven through
Forty-Seven charged Thompson and Garland with interstate
transportation of stolen property in violation of 18 U.S.C. §
2314; Counts Forty-Eight through Fifty charged the defendants
with mail fraud in violation of 18 U.S.C. § 1341; Counts Fifty-
One through Eighty-One charged them with money laundering in
violation of 18 U.S.C. § 1956; and Count Eighty-Two charged them
with money laundering in violation of 18 U.S.C. § 1957.
Under the applicable money laundering provisions of
U.S.S.G. § 2S1.1(a)(2), Thompson's base offense level was 20.
The district court found that the value of the funds involved in
the money laundering scheme was $352,220.50. This resulted in a
three-level enhancement under U.S.S.G. § 2S1.1(b)(2)(D).
Thompson received a three point downward adjustment for
acceptance of responsibility. The district court also found that
Thompson had a criminal history category of III.
After considering a range of 41 to 51 months, the
district court sentenced Thompson to fifty months in prison on
both the conspiracy and the money laundering counts, to be served
concurrently, to be followed by two concurrent three year terms
of supervised release. App. 100. Thompson was ordered to pay
$252,693.23 in restitution and a $100 special assessment to the
court. This appeal followed.
III
Thompson challenges the district court's interpretation
of the Sentencing Guidelines. The district court's
interpretation of the Guidelines is an issue of law subject to
plenary review. United States v. Deaner, 1 F.3d 192, 196 (3d
Cir. 1993). Section 2S1.1 of the Sentencing Guidelines
(Laundering of Monetary Instruments) provides, among other
things, for a two level increase in offense level if the value of
the funds laundered exceed a $200,000. U.S.S.G. § 2S1.1(b)(2)(C).
The Sentencing Guidelines prescribe a three level increase in
offense level when the value of the funds laundered exceed
$350,000. U.S.S.G. § 2S1.1(b)(2)(D).
Thompson argues that the district court erred by
including the full $352,220.50 in calculating the "value of the
funds" prescribed in U.S.S.G. § 2S1.1 and should have excluded
the $99,561.27 that was frozen by PNC Bank and subsequently
returned to the J.P. Morgan investors. Thus, Thompson contends
that the district court should have considered only the sum of
$252,659.23 in calculating his sentence. If this were so,
Thompson's offense level would be reduced by one point, which
would accordingly result in the reduction of his sentence.
Thompson's argument that the district court applied the
Guidelines incorrectly is premised upon his interpretation of
this Court's decision in United States v. Kopp, supra. Kopp
involved a defendant who made fraudulent representations to
obtain a $13,750,000 bank loan. Kopp pled guilty to procuring a
loan by fraudulent misrepresentations, in violation of 18 U.S.C.
§ 1344. 921 F.2d at 522. At sentencing, the district court
applied the fraud and deceit provisions of U.S.S.G.
§ 2F1.1(b)(1).5 Section 2F1.1 determines the sentence by
reference to the measurable "loss" that results from the fraud
and deceit.
5
. Section 2F1.1 (Fraud and Deceit) of the Sentencing Guidelines
provides, in relevant part, that:
. . . .
Although it was uncontroverted that Kopp made
fraudulent representations to obtain the loan, he did offer the
bank a deed as collateral. The bank ultimately sold the property
for $14,500,000, $750,000 more than the face value of the loan.
Id. at 524. Nonetheless, the district court calculated the
"loss" under §2F1.1(b)(1) at $13,750,000, the full face value of
the loan. We vacated the judgment and sentence of the district
court, holding that in fraudulent loan application cases "the
loss is the amount of loss not repaid at the time the offense is
discovered, reduced by the amount the lending institution has
recovered, or can expect to recover, from the assets pledged to
secure the loan." Id. at 535.
Kopp is clearly distinguishable from the present case.
As contrasted with Kopp, the present appeal concerns the
application of Sentencing Guideline § 2S1.1(b)(2) not
§ 2F1.1(b)(1). Section 2S1.1(b)(2) computes the base level
according to the "value of the funds" involved in the money
laundering scheme, not according to the "loss" incurred. As the
Tenth Circuit has held, when considering the impact of fraud on
individual victims it is the loss which governs the measure of
(..continued)
(b)(1) If the loss exceeded $2,000, increase the offense level as
follows:
. . . .
(A) $2,000 or less no increase
. . . .
(S) More than $80,000,000 add 18
the sentence imposed, whereas in considering a money laundering
offense such as the one here, the amount of the loss is not the
measure of the sentence. Rather, it is the value of the funds
involved in the money laundering transaction. This is so because
"[t]he harm from such a transaction does not generally fall upon
an individual, but falls upon society in general. Thus, the
measure of harm under § 2S1.1 is the total amount of the funds
involved." United States v. Johnson, 971 F.2d 562, 576 (10th
Cir. 1992).
Although the Commentary to § 2S1.1 does not expressly
define "the value of the funds," it states that "[t]he amount of
money involved is included as a factor because it is an indicator
of the magnitude of the criminal enterprise, and the extent to
which the defendant aided in the enterprise." The Commentary to
§ 2S1.1 makes no reference to "loss" and contains no cross-
references to § 2F1.1. The Commentary's statement that the
"amount of money involved is included as a factor" can only refer
to the "value of the funds" language of § 2S1.1(b)(2). The
Commentary's reference to "the amount of funds involved" in the
money laundering scheme and § 2S1.1(b)(2)'s reference to "the
value of the funds" hence should be read synonymously.
It is uncontroverted that Thompson deposited
$352,220.50 in laundered funds in PNC Bank in violation of 18
U.S.C. §1956. The sum of $352,220.50 is plainly the "amount of
money involved" in this case and gives the clearest "indicator of
the magnitude of the criminal enterprise."
The Money Laundering Control Act's6 ("the Act")
reference to "value" also supports our interpretation of "the
value of the funds" under § 2S1.1(b)(2). Among other things, the
sentencing provisions of that Act permit a district court to
impose a sentence of "twice the value of the property involved in
the transaction." Under 18 U.S.C. § 1956 (c)(3), "The term
`transaction' . . . with respect to a financial institution
includes the deposit, withdrawal, transfer between accounts . . .
through, or to a financial institution, by whatever means
effected." These are the very acts to which Thompson pled
guilty. Nowhere in the Act does the term "loss" appear.
The provisions of the Act to which we have referred
look only to the value of the laundered funds that were
transacted by and through a financial institution. Neither the
Act nor U.S.S.G. § 2S1.1(b)(2) provide for any mitigation of
punishment if the victims of the money laundering scheme recoup
some, or even all, of their losses. Accordingly, we hold that
the calculation of "the value of the funds" under § 2S1.1(b)(2)
includes the aggregate of all funds involved in the money
laundering scheme without regard to either the "actual loss"
which the victim suffered or the return of any monies to the
victims. In the instant case, the district court determined that
6
. 18 U.S.C. §§ 1956-57.
the value of the funds involved in Thompson's unlawful activities
was $352,220.50.
Our reading and our interpretation of the money
laundering and fraud provisions of the Guidelines is consistent
with that of other courts that have addressed this issue. Every
Court of Appeals that has reviewed sentences imposed under
U.S.S.G. § 2S1.1(b)(2) and discussed sentences imposed under
U.S.S.G. § 2F1.1(b)(1) has held that "value of funds" under
§ 2S1.1 is not limited to or the same as the concept of "loss",
which is the measure of culpability found in § 2F1.1. See United
States v. Johnson, 971 F.2d 562, 576 (10th Cir. 1992); United
States v. Taylor, 984 F.2d 298, 303 (9th Cir. 1993); United
States v. Tansley, 986 F.2d 880, 884 (5th Cir. 1993); United
States v. Barrios, 993 F.2d 1522, 1524 (11th Cir. 1993).
Because we reject Thompson's contention that
§ 2S1.1(b)(2)'s reference to "the value of the funds" relates to
the actual loss suffered by victims of the money laundering
scheme, we will affirm the district court's sentence of May 25,
1994 imposed upon Thompson.