United States v. Thompson

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Precedential or Non-Precedential: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 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.