United States of America v. Ian Freeman

2023 DNH 106P

• Court: District Court, D. New Hampshire
• Decided: August 22, 2023
• Docket: 21-cr-41-JL
• Status: Published

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

United States of America

v. Criminal No. 21-cr-41-JL Opinion No. 2023 DNH 106P Ian Freeman

MEMORANDUM ORDER

The defendant in this case, Ian Freeman, was tried on charges of operating an

unlicensed money transmitting business (Count 1), conspiracy to operate an unlicensed

money transmitting business (Count 2), money laundering (Count 3), conspiracy to

commit money laundering (Count 4), and four counts of attempt to evade or defeat taxes

for each year from 2016 to 2019 (Count 5-8). Prior to trial, Freeman joined co-defendant

Aria DiMezzo’s1 motion to dismiss Counts 1 and 2. After argument, the court denied the

motion by oral order.2 Following the court’s ruling, DiMezzo plead guilty, and Freeman

went to trial. After a 10-day trial, the jury returned guilty verdicts on all eight counts.

Freeman orally moved under Rule 29 for judgment of acquittal as to each count at the end

of the prosecution’s case-in-chief, and he renewed the motion at the end of the defense

case. The court took the oral motion under advisement and allowed Freeman’s written

motion after trial.

1 See Freeman Motion for Joinder (doc. no. 177); DiMezzo Motion to Dismiss (doc. no. 176). 2 See Transcript of Motion Hearing (doc. no. 268). In his motion for acquittal, Freeman incorporates the arguments for dismissal of

Counts 1 and 2, which were first raised in DiMezzo’s motion to dismiss.3 Freeman also

argues that the trial evidence was insufficient to show that he knowingly engaged in the

business of money transmitting, willfully joined a conspiracy to do so, or that any money

“transmission” actually occurred. As for Counts 3 and 4, Freeman contends that the

evidence was insufficient to support the conclusion that he knowingly conducted a money

laundering transaction or willfully joined a conspiracy to do so. And finally, Freeman

argues that the prosecution failed to prove beyond a reasonable doubt that he owed and

evaded federal income tax, as alleged in Counts 5-8.

The court grants Freeman’s motion for judgment of acquittal as to the money

laundering count, upon finding that the evidence adduced at trial was insufficient to prove

that Freeman knew that the prohibited transaction alleged in the indictment occurred. For

the reasons articulated in its oral order on the motion to dismiss, and those further

explained below, the court denies Freeman’s motion for acquittal as to the remaining

counts. This order also memorializes the court’s oral order denying the motion to

dismiss. See, e.g., United States v. Joubert, 980 F. Supp. 2d 53, 55 n.1 (D.N.H. 2014),

aff’d, 778 F.3d 247 (1st Cir. 2015) (noting a district court’s authority to later reduce its

3 See Freeman Rule 29 Motion (doc. no. 265) at 2.

2 prior oral findings and rulings to writing (citing In re Mosley, 494 F.3d 1320, 1328 (11th

Cir. 2007))).4

Applicable legal standards

Motion to dismiss. A criminal defendant may move to dismiss an indictment on

the ground that it fails to state an offense based on a pure legal issue. See Fed. R. Crim.

P. 12(b)(3)(B)(v). A motion to dismiss an indictment, however, is not a way to test the

sufficiency of the evidence behind an indictment’s allegations. United States v. Guerrier,

669 F.3d 1, 4 (1st Cir. 2011).

Motion for judgment of acquittal. “No person shall . . . be deprived of life,

liberty, or property, without due process of law.” U.S. Const. amend. V. The Fifth

Amendment’s due process clause “prohibits the criminal conviction of any person except

upon proof of guilt beyond a reasonable doubt.” Jackson v. Virginia, 443 U.S. 307, 309

(1979). Accordingly, “[a]fter the prosecution closes its evidence or after the close of all

the evidence, the court on the defendant’s motion must enter a judgment of acquittal of

any offense for which the evidence is insufficient to sustain a conviction.” Fed. R. Crim.

P. 29(a). The court assesses “whether ‘a rational factfinder could find, beyond a

reasonable doubt, that the prosecution successfully proved the essential elements of the

crime.’” United States v. Ortiz, 447 F.3d 28, 32 (1st Cir. 2006) (quoting United States v.

Moran, 312 F.3d 480, 487 (1st Cir. 2002)). If the “verdict ‘finds support in a plausible

4 To the extent there is any inconsistency between the factual and legal findings in the court’s oral orders and its written order, this order controls.

3 rendition of the record,’” the conviction must stand. United States v. Oliver, 19 F.4th

512, 516 (1st Cir. 2021) (quoting United States v. Echeverri, 982 F.2d 675, 677 (1st Cir.

1993)).

When reviewing the evidence, the court “take[s] all inferences in the light most

favorable to the verdict . . . give[s] equal weight to both direct and circumstantial

evidence, and . . . neither weigh[s] witness credibility nor require[s] the prosecution to

‘eliminat[e] every possible theory consistent with the defendant’s innocence[.]” Id.

(quoting United States v. Rivera-Ruiz, 244 F.3d 263, 266 (1st Cir. 2001)). It “evaluate[s]

the sum of all the evidence and inferences drawn therefrom, and determine[s] whether

that sum is enough for any reasonable jury to find all the elements of the crime proven

beyond a reasonable doubt, even if the individual pieces of evidence are not enough when

viewed in isolation.” United States v. Santos-Soto, 799 F.3d 49, 57 (1st Cir. 2015). In

conducting a sufficiency review, however, “some degree of intellectual rigor is required”

and the court must “reject those evidentiary interpretations and illations that are

unreasonable, insupportable, or overly speculative.” United States v. Rodríguez-

Martinez, 778 F.3d 367, 371 (1st Cir. 2015) (quoting United States v. Spinney, 65 F.3d

231, 234 (1st Cir. 1995)).

Background

Consistent with the Rule 29 standard, the court draws on the evidence that the

prosecution presented at trial when reciting the facts. This case concerns a business that

4 Freeman and his colleagues5 operated, in which they charged their customers a fee for

exchanging fiat currency for virtual currency—specifically, bitcoin.

Freeman conducted the business, in part, on a website, localbitcoins.com.

Freeman also interacted with customers on Telegram, an application that allowed for

encrypted communications. He gave similar instructions to each of his customers as to

the method for conducting a transaction, and directed them to wire fiat currency to

particular bank accounts, some of which were held by his colleagues and others by

entities such as a “church” that he founded. Freeman then calculated the equivalent value

of bitcoin, less the transaction fee, and transferred that bitcoin to a “digital wallet.” A

digital wallet is a program or device that stores virtual currency. Recipients of bitcoin

enjoy a level of anonymity, since the owner of a digital wallet is harder to identify than

5 The court provisionally admitted certain out-of-court, co-conspirator statements at trial under Fed. R. Evid. 801(d)(2)(E), against the defendant’s objection. See Trial Tr. Day 5 Afternoon (doc. no. 271) at 57:9-19 (orally finding the objected-to co-conspirator statements “admissible subject to review on request by the defendant at the end of evidence if necessary . . . .”). The First Circuit Court of Appeals has held that the court must make certain findings regarding the admissibility of such evidence. See, e.g., United States v. Diaz, 670 F.3d 332, 348 (1st Cir. 2012) (“A district court faced with a challenge to the admission of a co-conspirator’s statement must provisionally admit the statement and then wait until the end of the trial to consider whether, in light of all the evidence, the following four conditions are satisfied by a preponderance of the evidence: (1) a conspiracy existed; (2) the defendant was a member of the conspiracy; (3) the declarant was also a member of the conspiracy; and (4) the declarant’s statement was made in furtherance of the conspiracy.” (internal citations omitted)); United States v. Merritt, 945 F.3d 578, 586 (1st Cir. 2019) (“To admit evidence of out-of-court statements made by a defendant’s co-conspirator, ‘the district court must determine by a preponderance of the evidence that the declarant and the defendant were members of the same conspiracy and that the statement was made in furtherance of the conspiracy.’” (quoting United States v. Paz- Alvarez, 799 F.3d 12, 29 (1st Cir. 2015))). Freeman did not renew his objection or request findings supporting the admission of the co-conspirator statements at the close of evidence. Nevertheless, the court finds that the requisite findings are fully supported by the evidence presented at trial, and the statements were properly admitted.

5 the owner of a bank account, for instance. Over the course of the trial, several of

Freeman’s customers testified that they were the victims of romance (or other online)

scams, and they purchased bitcoin from Freeman as part of those scams. Specifically,

under the scammer’s instruction, the victim deposited fiat currency into one of Freeman’s

accounts in order to purchase bitcoin that ultimately entered a digital wallet associated

with the scammer.

The money laundering charge centers on a bitcoin purchase completed by an

undercover agent at one of Freeman’s bitcoin exchange machines located in New

Hampshire on August 25, 2020. The agent—Special Agent Pavel Prilotsky with the

Internal Revenue Service Criminal Investigation Unit—initiated contact with Freeman on

localbitcoins.com in or around September 2019. The agent asked to purchase bitcoin

from Freeman, and Freeman provided him with instructions on the information he

required and the account to which the agent should wire money for his purchase. They

continued to interact and complete transactions on the website for a few months. The

agent later asked if he could purchase bitcoin from Freeman through other means than

localbitcoins.com. Freeman instructed the agent to contact him directly on Telegram.6

The agent communicated with Freeman several times on Telegram to complete additional

bitcoin purchases through bank wire transfers. At one point, Freeman left a voice

message for the agent on Telegram, explaining that, if the agent sought to mail money, he

6 Id.

6 should use the United States Postal Service, since a warrant is “supposedly” required to

open packages sent through the U.S. mail.7

After some time passed, Freeman told the agent about his bitcoin exchange

machines in New Hampshire, where customers could complete bitcoin purchases in

person. The agent asked whether the machines utilized facial recognition technology,

and Freeman assured him that the machines’ identifying capabilities had been turned off.

The agent continued to communicate with Freeman while completing an $11,000

transaction at a machine located at Thirsty Owl, an establishment in Keene, New

Hampshire. Freeman discounted his standard 14% transaction fee to 10% for this

purchase.8

The agent eventually told Freeman that the money he was exchanging for bitcoin

was the product of drug sales. In a subsequent Telegram conversation on July 30, 2020,

Freeman wrote, “unfortunately I can’t sell you bitcoin because you told me too much

about what you do.”9 The agent expressed disappointment, writing, “can’t even use your

ATM [bitcoin exchange machines]? I told a few of my buddies. They all got excited.

Now don’t even know what to respond to them.”10 Freeman replied, “[m]y answer to the

7 Prosecution Trial Ex. 606 (audio). 8 See Trial Tr. Day 4 Morning (doc. no. 270) at 116:11-16, 117:18-20. 9 Id. at 128:4-5. 10 See id. at 128:9-15.

7 question is, I can’t KNOWINGLY assist you with financial matters.”11 The word

“knowingly” appeared in all capital letters.

The agent inquired further into Freeman’s position, and Freeman explained: You told me you sell drugs. Therefore, to assist you with buying bitcoin would be considered money laundering. Money laundering requires knowledge of the illegal activity. I don’t think you are an undercover agent, but you got a little too loose lipped. So while I am not opposed to the sale of drugs, I do need to be careful. Sadly that means I cannot KNOWINGLY sell bitcoin to you.12

Again, the word “knowingly” appeared in all capital letters in the message.

On August 25, 2020, the agent halted Freeman outdoors as he was walking and

asked him if there was still a bitcoin exchange machine located at Thirsty Owl.13

Freeman recognized the agent, as they had met in person before. Freeman confirmed that

the machine was still there. The agent then asked whether he could use it, and Freeman

replied, “I can’t tell you that you can use that.”14 The agent responded, “okay, thanks.”15

Later that day, the agent purchased about $20,000 in bitcoin from the Thirsty Owl

machine. Freeman’s standard 14% transaction fee, and not a discounted fee, applied to

this purchase.16

11 Id. at 128:16-17. 12 Id. at 129:17-23. 13 The agent and Freeman were approximately 30 miles from Keene and Thirsty Owl during this conversation. 14 Prosecution Trial Ex. 610A (video). 15 Id. 16 See Trial Tr. Day 4 Afternoon (doc. no. 279) at 19:10-17.

8 Freeman and the agent did not discuss the purchase after this point, and Freeman

did not make an admission or otherwise indicate that he knew that the transaction took

place. Law enforcement agents seized records from Freeman’s home and home office,

but the prosecution did not introduce any such records that memorialized or referred to

the August 25 purchase. Further, while the prosecution presented evidence reflecting that

Freeman monitored at least some of his bitcoin exchange machines at times, it did not

elicit or introduce evidence that the August 25 transaction was specifically monitored, or

that Freeman had actual contemporaneous or subsequent knowledge of the transaction.

Analysis

As noted above, Freeman first joined DiMezzo’s motion to dismiss the unlicensed

money transmitting business counts (Counts 1 and 2) and later incorporated the

arguments from the motion to dismiss into his motion for acquittal on those counts.17

The court first addresses Freeman’s arguments for dismissal or acquittal as to Counts 1

and 2, and then turns to the remaining arguments in his motion for acquittal.

A. Operation of and conspiracy to operate an unlicensed money transmitting business (Counts 1 and 2) Freeman premises his motion to dismiss on the assumption that the United States

Attorney, in deciding to charge Freeman with operating and conspiring to operate an

unlicensed money transmitting business, relied on (or needed to rely on) official guidance

from FinCEN applying the Bank Secrecy Act’s implementing regulations to persons

17 See doc. no. 265 at 2 (“Additionally, the Church was not engaged in ‘money transmitting’. The transactions involved church-owned Bitcoin. The Defendant incorporates all arguments and the pretrial Motion to Dismiss with regard to this aspect of our current Rule 29 motion.”).

9 exchanging virtual currencies. Specifically, in 2013, FinCEN issued guidance opining

that an “exchanger” of virtual currency (as defined in FinCEN’s regulations) that “(1)

accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual

currency for any reason is a money transmitter under FinCEN’s regulations,” and must

register under 31 U.S.C. § 5330. Under this guidance, an “exchanger is a person engaged

as a business in the exchange of virtual currency for real currency, funds, or other virtual

currency.”18

Freeman argues that FinCEN acted without authority from Congress in issuing this

guidance and taking the position that the money transmitting business registration

requirements apply to individuals or entities that exchange virtual currencies, like bitcoin.

Absent such Congressional authority, Freeman avers, the agency guidance and regulatory

interpretation are invalid under the major questions doctrine,19 and Freeman’s prosecution

for operating an unlicensed money transmitting business cannot stand.

The prosecution responds that its charging decision (and ultimately, its proof at

trial) depends on the statute itself, not the implementing regulations or FinCEN’s

associated interpretive guidance. Under the plain meaning of the statute, Freeman

knowingly conducted, controlled, managed, supervised, directed, or owned “all or part of

an unlicensed money transmitting business,” 18 U.S.C. § 1960(a), because that business

involved the transfer of “funds” and “fail[ed] to comply with the money transmitting

18 2013 FinCEN Guidance, FIN-2013-G0012013, at 2. 19 W. Virginia v. Env’t Prot. Agency, 142 S. Ct. 2587, 2610 (2022) (“Under our precedents, this is a major questions case.”).

10 business registration requirements under section 5330 of title 31, United States Code, or

regulations prescribed under such section.” § 1960(b)(1)(B) & (b)(2) (emphasis added).

The prosecution further argues that even if its proof depended on FinCEN’s interpretation

of the regulations, and that interpretation constituted a “major question,” FinCEN’s

actions would not exceed the authority given to it by Congress. For the reasons detailed

below, the court agrees with the prosecution on all points.

1. Statutory interpretation

The court begins by determining whether the plain and ordinary meaning of

“funds” as used in 18 U.S.C. § 1960 includes bitcoin – the virtual currency at issue here.

See Babb v. Wilkie, 140 S. Ct. 1168, 1177 (2020) (noting that where the court determines

the plain meaning of a statute based on its unambiguous words, the “judicial inquiry is

complete”) (quoting Desert Palace, Inc. v. Costa, 539 U.S. 90, 98 (2003)). Courts have

near unanimously found that bitcoin may constitute “funds” under § 1960 and the money

laundering statute, 18 U.S.C. § 1956. See, e.g., United States v. Iossifov, 45 F.4th 899,

913 (6th Cir. 2022), cert. denied, No. 22-6343, 2023 WL 2123960 (U.S. Feb. 21, 2023);

United States v. Harmon, 474 F. Supp. 3d 76, 80, 90 (D.D.C. 2020); United States v.

Ologeanu, No. 5:18-CR-81-REW-MAS, 2020 WL 1676802, at *11 (E.D. Ky. Apr. 4,

2020); United States v. Stetkiw, No. 18-20579, 2019 WL 417404, at *2 (E.D. Mich. Feb.

1, 2019); United States v. Mansy, 2:15-CR-198-GZS, 2017 WL 9672554, at *1 (D. Me.

May 11, 2017) (Signal, J.); United States v. Murgio, 209 F. Supp. 3d 698, 707 (S.D.N.Y.

2016); United States v. Budovsky, No. 13CR368 DLC, 2015 WL 5602853, at *14

11 (S.D.N.Y. Sept. 23, 2015); United States v. Faiella, 39 F. Supp. 3d 544, 545 (S.D.N.Y.

2014).20

Freeman agrees and concedes that if the court interprets the statute consistent with

these cases, his motion fails.21 He instead asks the court to forego statutory interpretation

entirely and raises an apparently novel challenge to FinCEN’s actions under the major

questions doctrine. The court addresses and rejects that argument below, see infra. § III,

A, 2. But first, it construes the operative statute.

Under 18 U.S.C. § 1960, a person commits an offense when he “knowingly

conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed

money transmitting business.” In relevant part, the statute defines the term “unlicensed

money transmitting business” as “a money transmitting business which affects interstate

or foreign commerce in any manner or degree” and “fails to comply with the money

transmitting business registration requirements under [31 U.S.C. § 5330] or regulations

prescribed under such section.” 18 U.S.C. § 1960(b)(1)(B). The version of 31 U.S.C. §

5330(d) in effect at the time of the offense conduct also defined “money transmitting

20 The only contrary authority, United States v. Petix, is a report and recommendation from a Magistrate Judge in the Western District of New York that was not adopted by the district court. See 15-CR-227A, 2016 WL 7017919, at *5 (W.D.N.Y. Dec. 1, 2016). No other court, including other judges within the Western District of New York, has adopted the Petix court’s reasoning, as “[v]irtually every federal court to consider this issue has determined that the ordinary meaning of ‘funds’ in the federal money laundering statutes encompasses Bitcoin.” United States v. Phillips, No. 22-CR-6058CJS, 2022 WL 16990050, at *3 (W.D.N.Y. Nov. 17, 2022), report and recommendation adopted, No. 22-CR-6058, 2023 WL 2775610 (W.D.N.Y. Apr. 4, 2023). 21 See doc. no. 176 at 19. At oral argument, DiMezzo’s counsel (who prepared and filed the motion that Freeman later joined) admitted that “if the normal rules of statutory interpretation apply, we lose . . . I grant that.” Doc. no. 268 at 9:22-23.

12 business” as “any other person who engages as a business in the transmission of funds,

including any person who engages as a business in an informal money transfer system[.]”

Pub. L. No. 107-56, 115 Stat. 272, 328 (2001). In 2021, Congress amended § 5330(d) to

include in the definition of money transmitting business “any other person who engages

as a business in the transmission of currency, funds, or value that substitutes for currency,

including any person who engages as a business in an informal money transfer system[.]”

31 U.S.C. § 5330(d)(1)(A) (emphasis added). This amended version of § 5330(d) does

not apply to Freeman’s conduct.

In the Superseding Indictment, the Grand Jury charged Freeman with operating,

and conspiring to operate, “an unlicensed money transmitting business, in violation of

Title 18, United States Code, Section 1960.”22 Specifically, the indictment charged

Freeman and others with operating a business that “failed to comply with the money

transmitting business registration requirements set forth in Title 31, United States Code,

Section 5330, and the regulations prescribed thereunder.”23

While the indictment referenced purported unspecified violations of the

“regulations,” the prosecution clarified at oral argument that it could prove its case by

showing that Freeman violated either the statute or the regulations. See United States v.

Bader, 698 F.2d 553, 555 (1st Cir. 1983) (“The complaint does not use the statute’s

22 Superseding Indictment (doc. no. 139) at ¶ 12. 23 Id. at ¶ 13; see also id. at ¶ 3 (alleging that defendants knowingly operated a business that failed to “meet registration and reporting requirements set forth in Title 18, United States Code, Section 1960, and in regulations promulgated by the United States Department of the Treasury”), ¶ 17, ¶ 20.

13 disjunctive ‘or,’ for the simple reason that, when a statute is phrased in the disjunctive, it

is well-established that a criminal complaint based on that statute must be phrased in the

conjunctive. . . . It is equally well-established that the government need prove only one

of the conjunctively connected offenses to warrant conviction.”).24 It further represented

that it planned to present evidence demonstrating violations of the statute, without

reference to the regulations or FinCEN’s guidance about the regulations.25 The

prosecution also proposed jury instructions on the unlicensed money transmitting

business counts that referenced only the statute and case law applying the statute, rather

than the regulations.26 The court adopted a slightly modified version of these instructions

– without referencing the regulations – and instructed the jury accordingly. The court

thus focuses on the statute.

24 The prosecution is correct that a person may violate § 1960 by failing to comply with the registration requirements of 31 U.S.C. § 5330, but not necessarily the regulations prescribed thereunder. For example, § 5330(a)(1) provides that “[a]ny person who owns or controls a money transmitting business shall register the business (whether or not the business is licensed as a money transmitting business in any State) with the Secretary of the Treasury” within 180 days from the “date on which the business is established.” (emphasis added). The statute alone requires registration, regardless of what the regulations say. The statute also details the required contents of the registration, see § 5330(b), and “[s]ubject to [those] requirements,” provides that the Secretary of the Treasury “shall prescribe, by regulation, the form and manner for registering a money transmitting business.” § 5330(a)(2). Freeman was not charged with failing to follow the required “form and manner” of registration under the regulations; rather, he was charged with failing to register all together. The regulations – and FinCEN’s interpretation of them – therefore have no bearing on whether he violated § 1960. 25 In its oral order, the court clarified that it was not ruling that “removing the reg[ulations] from the criminal trial” was “legally necessary.” Doc. no. 268 at 56:3-6. The parties were free to inject the regulations into the trial as they wished. 26 See Freeman Proposed Jury Instructions (doc. no. 243); Prosecution Proposed Jury Instructions (doc. no. 250). Freeman did not object to the fact that the prosecution’s proposed jury instructions on the money transmitting claim did not reference the regulations.

14 Freeman argues in his Rule 29 motion for acquittal that the trial evidence was

insufficient to prove that he was engaged in “money transmitting” under § 1960 because

the transactions involved bitcoin.27 Under § 1960, however, “the term ‘money

transmitting’ includes transferring funds on behalf of the public by any and all means

including but not limited to transfers within this country or to locations abroad by wire,

check, draft, facsimile, or courier.” 18 U.S.C. § 1960(b)(2) (emphasis added). The

statute does not define “funds,” but “[w]hen a term goes undefined in a statute,” courts

determine “its ordinary meaning.” Taniguchi v. Kan Pac. Saipan, Ltd., 566 U.S. 560, 566

(2012). As several courts have recognized, the “ordinary meaning of ‘funds[ ]’ . . . is

‘available pecuniary resources,’ which essentially means, ‘something generally accepted

as a medium of exchange, a measure of value, or a means of payment.’” Iossifov, 45

F.4th at 913 (quoting Stetkiw, 2019 WL 417404, at *2); see also Murgio, 209 F. Supp. 3d

at 707 (adopting identical ordinary meaning of “funds,” but adding that “[p]ecuniary is

defined as taking the form of or consisting of money” (quoting Webster’s Third New

International Dictionary 921 (2002))).

“[I]t is clear that bitcoins are funds within the plain meaning of that term.”

Murgio, 209 F. Supp. 3d at 707. “Bitcoins can be accepted ‘as a payment for goods and

services’ or bought ‘directly from an exchange with [a] bank account.’” Id. (quoting

Getting started with Bitcoin, bitcoin, https://bitcoin.org/en/getting-started (last visited

27 See doc. no. 265 at 2.

15 Sept. 16, 2016)). Indeed, as the trial evidence here showed,28 “[i]n today’s society,

Bitcoin is often used [to] pay for things, and it may sometimes be used as a medium of

exchange that is subsequently converted to currency to pay for things.” Iossifov, 45 F.4th

at 914; see also Faiella, 39 F. Supp. 3d at 545 (finding that bitcoins “clearly qualif[y] as

‘money’ or ‘funds’” under § 1960 because they “can be easily purchased in exchange for

ordinary currency, act[ ] as a denominator of value, and [are] used to conduct financial

transactions”).29

Moreover, while the plain and ordinary meaning of the statutory text

unambiguously includes bitcoin, and thus, the court is not inclined to look to the history

and purpose of § 1960, courts have held that that history and purpose nevertheless

“support[ ] the conclusion that bitcoins fall within the statute’s purview.” Murgio, 209 F.

Supp. 3d at 708. Congress enacted § 1960 to “address the fact that ‘money launderers

28 For example, Freeman presented testimony from business owners who accept bitcoin as payment for goods or services, such as pizza. See Trial Tr. Day 9 Morning (doc. no. 273) at 25- 26. 29 The key term “funds” appears in multiple statutes that work together to form the basis of Freeman’s unlicensed money transmitting business charges. For example, § 1960 defines “money transmitting” as “transferring funds on behalf of the public by any and all means . . . .” Section 5330 similarly defines a “money transmitting business” as a business that “engages in the transmission of funds” and is required to file reports under 31 U.S.C. § 5313. And the § 5313 reporting requirement applies to “financial institutions,” which include businesses that “engage[ ] in the transmission of funds.” 31 U.S.C. § 5312(a)(2)(R); see also Harmon, 474 F. Supp. 3d at 101 (“[C]ourts have held that ‘there is virtually no substantive difference, nor did Congress intend there to be a substantive difference, between the terms ‘money transmitting’ in Section 1960 and ‘money transmitting business’ in Section 5330.’” (quoting United States v. E- Gold, Ltd., 550 F. Supp. 2d 82, 92 n. 10 (D.D.C. 2008)). This “record of statutory usage demonstrates convincingly” that the plain and ordinary meaning of “funds” includes bitcoin. W. Virginia Univ. Hosps., Inc. v. Casey, 499 U.S. 83, 88 (1991).

16 with illicit profits ha[d] found new avenues of entry into the financial system.’” Id.

(quoting S. Rep. No. 101-460 (1990)). Thus, “[f]rom its inception,” the statute “sought to

prevent innovative ways of transmitting money illicitly,” and interpreting “funds” to

include bitcoin aligns with that purpose. Id.; see also Faiella, 39 F. Supp. 3d at 546

(observing that “Congress designed the statute to keep pace with such evolving threats,

which is precisely why it drafted the statute to [broadly] apply to any business involved

in transferring ‘funds . . . by any and all means’”) (quoting 18 U.S.C. § 1960(b)(2)).

Freeman contends that because bitcoin and other virtual currency did not exist in

2001, Congress could not have anticipated the word “funds” applying to such new

financial instruments. While Freeman is correct that bitcoin did not exist when Congress

amended the statute in 2001, this does not change the result. “[T]he fact that a statute can

be applied in situations not expressly anticipated by Congress does not demonstrate

ambiguity[;] it demonstrates breadth.” Pa. Dep’t of Corr. v. Yeskey, 524 U.S. 206, 212

(1998); see also Barr v. United States, 324 U.S. 83, 90 (1945) (“[I]f Congress has made a

choice of language that fairly brings a given situation within a statute, it is unimportant

that the particular application may not have been contemplated by the legislators.”);

Budovsky, 2015 WL 5602853, at *14 (finding that Congress may “address a general

problem with many variations” through broadly worded statutes like § 1960 and § 5330).

It is also well-settled that a “statute can be unambiguous without addressing every

interpretive theory offered by a party. It need only be ‘plain to anyone reading the Act’

17 that the statute encompasses the conduct at issue.” Salinas v. United States, 522 U.S. 52,

60 (1997) (quoting Gregory v. Ashcroft, 501 U.S. 452, 467 (1991)).30

In sum, the statute’s plain language and structure unambiguously include bitcoin.

And, to the extent that legislative intent and statutory purpose are legitimate and

permissible interpretive tools, they point to the same conclusion. See Mansy, 2017 WL

9672554, at *2. For these reasons, the Superseding Indictment does not fail to state a

criminal offense against Freeman for operating an unlicensed money transmitting

business, or conspiring to operate such a business, and the motion to dismiss is denied.

Freeman’s Rule 29 argument that the trial evidence was insufficient to support the jury’s

conclusion that he was engaged in “money transmitting” because the transactions

involved bitcoin is unavailing for the same reasons.

2. Major questions doctrine

Contending that the straightforward statutory interpretation principles outlined

above “miss the point,” Freeman asserts that the Supreme Court’s recent decision in West

Virginia v. EPA changed the legal landscape in such a way that FinCEN’s 2013

interpretive guidance of its regulations must be invalidated. 142 S. Ct. 2587 (2022).

Consequently, says Freeman, the indictment fails to state a criminal offense for violating

§ 1960. Freeman’s argument overlooks the fact that the indictment neither depends on

30 The allegedly unintended or “undesirable policy consequences” of following the statute’s plain and ordinary meaning likewise do not control the interpretative analysis. Bostock v. Clayton Cnty., Georgia, 140 S. Ct. 1731, 1753 (2020) (“The place to make new legislation, or address unwanted consequences of old legislation, lies in Congress.”).

18 nor references the FinCEN guidance, and the only agency arguably “interpreting” § 1960

for purposes of this prosecution is the Department of Justice, not FinCEN. Indeed, the

FinCEN guidance itself clarifies that it “explains only how FinCEN characterizes certain

activities involving virtual currencies under the Bank Secrecy Act [31 U.S.C. § 5330] and

FinCEN regulations” and “should not be interpreted as a statement by FinCEN about the

extent to which those activities comport with other federal or state statutes, rules,

regulations, or orders.”31 Importantly, “the FinCEN Guidance does not even mention §

1960, much less purport to interpret the statute’s use of the word ‘funds.’” Murgio, 209

F. Supp. 3d at 709.

Even if the FinCEN guidance mattered to this prosecution, however, the court is

not persuaded by Freeman’s arguments for at least three reasons. First, FinCEN’s

regulatory interpretation is not a “major question.” Second, even if this were an

extraordinary case of “deep economic and political significance,” where, as here, the

statutory language at issue is unambiguous, the court simply enforces the statute

according to its terms and does not need to look to, let alone defer to, the agency’s

interpretation. King v. Burwell, 576 U.S. 473, 486 (2015). And third, FinCEN’s

interpretation is consistent with the clear statement of regulatory authority Congress

granted it and thus does not run afoul of the major questions doctrine, to the extent that

the doctrine applies.

31 2013 FinCEN Guidance at n.1.

19 a) Applicability

The major questions doctrine operates as something of an exception to Chevron

deference. “Deference under Chevron to an agency’s construction of a statute that it

administers is premised on the theory that a statute’s ambiguity constitutes an implicit

delegation from Congress to the agency to fill in the statutory gaps.” Brown &

Williamson, 529 U.S. at 159 (citing Chevron U.S.A. Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837, 844 (1984)). “In extraordinary cases, however, there may be

reason to hesitate before concluding that Congress has intended such an implicit

delegation.” Id. Those extraordinary cases – “in which the history and the breadth of the

authority that [the agency] has asserted, and the economic and political significance of

that assertion” – call for a “different approach.” West Virginia, 142 S. Ct. at 2608.

“[S]omething more than a merely plausible textual basis for the agency action is

necessary. The agency instead must point to ‘clear congressional authorization’ for the

power it claims.” Id. at 2609 (quoting Utility Air Regulatory Group v. EPA, 573 U.S.

302, 324 (2014)); but see Yeskey, 524 U.S. at 212 (noting that “in the context of an

unambiguous statutory text,” arguments concerning whether Congress has made its

intention clear are “irrelevant”).

The West Virginia majority simply concluded that it was “a major questions case”

under “[its] precedents.” Id. at 2610. In a concurrence joined by Justice Alito and relied

on by Freeman,32 however, Justice Gorsuch summarized, based on existing case law,

32 See doc. no. 176 at 15.

20 certain factors for courts to consider when determining whether a case implicates a

“major question.” Id. at 2620 (Gorsuch, J., concurring) (“[O]ur cases supply a good deal

of guidance about when an agency action involves a major question for which clear

congressional authority is required.”). These factors counsel against applying the

doctrine here.

First, “the doctrine applies when an agency claims the power to resolve a matter of

great ‘political significance’ or end an ‘earnest and profound debate across the country.’”

Id. (quoting Gonzalez v. Oregon, 546 U.S. 243, 267-268 (2006)). Whether one sub-

agency out of thousands within the executive branch believes that businesses which

transmit bitcoin for fiat currency must register with FinCEN can hardly be described as a

matter of “great political significance.”33 Nor does it purport to end an earnest and

profound national debate about regulating virtual currencies. That debate is just as

vibrant now as it was prior to FinCEN issuing its guidance in 2013. Importantly,

Congress has not “considered and rejected bills authorizing something akin to the

agency’s proposed course of action,” which is often a “sign than an agency is attempting

to work [a]round the legislative process to resolve for itself a question of great political

significance.” Id. at 2621 (cleaned up).

Second, major questions arise when an agency “seeks to regulate a significant

portion of the American economy or require billions of dollars in spending by private

33 Nor is this court in the best position to decide what constitutes a matter of great political significance.

21 persons or entities.” Id. (cleaned up). Freeman contends that FinCEN seeks to regulate a

significant portion of the economy through its interpretive guidance because as of

November 2021, non-state-issued digital assets had a combined market capitalization of

$3 trillion. See doc. no. 176, at 10. While undoubtedly a large figure, the argument

misses the mark. FinCEN’s exercise of regulatory authority does not target the entire $3

trillion virtual currency market. Rather, it is directed at a fraction of market participants

who are in the business of transmitting virtual currencies and not already registered with

FinCEN. Freeman does not attempt to quantify the portion of the virtual currency market

that FinCEN’s interpretative guidance would actually affect.

Moreover, Freeman has presented no evidence that FinCEN’s guidance would

require billions of dollars in spending by private persons or entities. By contrast, in West

Virginia, EPA’s exercise of authority would “force [dozens of] coal and gas-fired power

plants to cease [operating] altogether,” “eliminate thousands of jobs by 2025,” and “cause

consumers’ electricity costs to rise by over $200 billion.” Id. at 2621-22. Freeman has

offered no evidence of similar downstream consequences here.

Third and finally, the “major questions doctrine may apply when an agency seeks

to intrud[e] into an area that is the particular domain of state law.” Id. at 2621 (cleaned

up). Freeman does not meaningfully argue, or present evidence, that regulation of

financial services entities and money transmitting businesses is an “area[ ] traditionally

regulated by the States.” Id. (quoting Gregory, 501 U.S. at 459-460). While Freeman is

correct that New Hampshire has chosen not to require similar businesses to register with

the State, that alone does not indicate that FinCEN is stepping into a particular domain of

22 state law. The Federal Government and the States often regulate similar industries,

entities, or people, but sometimes regulate them differently. Thus, unlike EPA’s actions

in West Virginia, FinCEN’s interpretive guidance does not create federalism concerns.

Id. at 2622 (finding that the “CPP unquestionably has an impact on federalism, as ‘the

regulation of utilities is one of the most important of the functions traditionally associated

with the police power of the States.’”) (quoting Arkansas Elec. Cooperative Corp. v.

Arkansas Pub. Serv. Comm’n, 461 U.S. 375, 377 (1983)). For all of these reasons, the

major questions doctrine does not apply to FinCEN’s interpretive guidance.

b) Unambiguous statutory language, not agency guidance, controls

The Supreme Court has recognized that even in “extraordinary cases” involving

questions of “deep economic and political significance,” it is the court’s “task to

determine the correct reading” of the statute at issue. King, 576 U.S. at 486 (quoting

FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 159 (2000)). “If the

statutory language is plain, [the court] must enforce it according to its terms.” Id.

(emphasis added); see also Biden v. Nebraska, 143 S. Ct. 2355, 2376 (2023) (Barrett, J.,

concurring) (“In this case, the Court applies the ordinary tools of statutory interpretation

to conclude that the HEROES Act does not authorize the Secretary’s plan. The major

questions doctrine reinforces that conclusion but is not necessary to it.”) (emphasis

added).

Therefore, even assuming, without deciding, that this is such an extraordinary

case, as discussed above, see supra, § III, A, 1, the language of § 1960 and § 5330 is plain

and unambiguous, and the court enforces those statutes according to their terms. The

23 statutes cover Freeman’s conduct, and the prosecution could meet its burden of proving a

violation of § 1960 by relying on the statutes alone. There is accordingly no need to look

to, or rely upon, FinCEN’s interpretive guidance on the related regulations. See

Massachusetts v. E.P.A., 549 U.S. 497, 528-29 (2007) (rejecting EPA’s reading of a

statute based entirely on the unambiguous statutory text).

c) FinCEN acted within its clear Congressional delegation of authority

Freeman contends that Congress did not provide a clear statement to the Treasury

Department authorizing FinCEN’s purportedly new regulatory authority until it amended

§ 5330(d) in 2021. But assuming, without deciding, that FinCEN’s interpretive

guidance34 is a question of major economic and political significance, the agency had

“clear congressional authorization” to regulate in such a manner prior to 2021. West

Virginia, 142 S. Ct. at 2609 (quoting Utility Air, 573 U.S. at 324).

“Extraordinary grants of regulatory authority are rarely accomplished through

‘modest words,’ ‘vague terms,’ [ ] subtle device[s],” or “ambiguous statutory text.” West

Virginia, 142 S. Ct. at 2609 (quoting Whitman v. American Trucking Association, 531

U.S. 457, 468 (2001)). No such modesty, subtlety, or ambiguity exists here. “Section

34 It is not clear that the major questions doctrine applies to an agency’s interpretative guidance on a regulation (as opposed to its construction of a statute or creation of a new regulation), which do not have the force of law. See Perez v. Mortgage Bankers Ass’n, 135 S. Ct. 1199, 1204 (2015). Interpretive guidance does not “create new law, right[s] or duties,” but “merely clarif[ies] an existing statute or regulation.” United States v. Lott, 750 F.3d 214, 217 (2d Cir. 2014) (citation omitted). Because the 2013 FinCEN guidance is arguably an act of regulatory authority, however, the court assumes, without deciding, that it could be subject to challenge under the major questions doctrine.

24 5330 governs the registration of money transmitting businesses with [FinCEN], E-Gold,

550 F. Supp. 2d at 96, and expressly does so by authorizing the Secretary of the Treasury

to “prescribe, by regulation, the form and manner for registering a money transmitting

business.” 31 U.S.C. § 5330(a)(2). As discussed above, the statute in effect at the time

of Freeman’s conduct broadly defined “money transmitting businesses” as “any other

person who engages as a business in the transmission of funds, including any person who

engages as a business in an informal money transfer system or any network of people

who engage as a business in facilitating the transfer of money domestically or

internationally outside of the conventional financial institutions system.” 31 U.S.C §

5330(d), Pub. L. No. 107-56, 115 Stat. 272, 328 (2001). Therefore, the “regulations

clarify the scope of Section 5330,” which by its plain text covers a broad swath of

activities, persons, and entities. E-Gold, 550 F. Supp. 2d at 96.

Freeman does not argue that this statutory language is vague or ambiguous, nor

does he develop his argument beyond simply concluding that the language is “cryptic.”

Indeed, he does not offer an alternative construction, and even if he had, “genuine

ambiguity requires more than a possible alternative construction.” United States v.

Jimenez, 507 F.3d 13, 21 (1st Cir. 2001). He instead contends that because bitcoin did

not exist in 2001, Congress could not have intended to confer on FinCEN the authority to

regulate money transmitting businesses that use virtual currency. See doc. no. 176, at 19-

21. But the court has already rejected that argument. See supra, § III, A, 1 (quoting

Yeskey, 524 U.S. at 212); see also Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 499

(1985) (“[T]he fact that RICO has been applied in situations not expressly anticipated by

25 Congress does not demonstrate ambiguity. It demonstrates breadth.”); United States v.

Southwestern Cable Co., 392 U.S. 157, 172 (1968) (noting that while Congress could not

have foreseen the development of new communications technologies when it passed the

Communications Act in 1934, it gave the FCC broad authority to regulate such a “new

and dynamic” field through the administrative process). There is thus more than a

“colorable textual basis” in § 5330 authorizing FinCEN to issue the interpretive guidance

challenged here. West Virginia, 142 S. Ct. at 2609.

With clear authorization from Congress to regulate (and require registration of)

money transmitting businesses, FinCEN acted well within its long-established regulatory

authority by issuing the 2013 Guidance. That stands in stark contrast to EPA’s actions in

West Virginia, other recent major questions cases, and the purpose of the doctrine

altogether.

The major questions doctrine purports to address a “particular and recurring

problem: agencies asserting highly consequential power beyond what Congress could

reasonably be understood to have granted.” West Virginia, 142 S. Ct. at 2609. For

example, in West Virginia, the majority found that EPA was attempting to “discover in a

long-extant statute an unheralded power” to “restructure the American energy market,”

which was a “transformative expansion of [its] regulatory authority.” Id. at 2610

(quoting Utility Air, 573 U.S. at 324). EPA, through its rule, was effectively mandating

energy generation by natural gas, wind, solar, or other non-coal-fired sources. In that

way, the EPA was not simply regulating pollutants or pollution emissions. It was getting

into the business of making policy judgments as to the makeup of the country’s energy

26 production industry and effectively ordering the eventual shuttering of a major segment

of the nation’s existing power generation sources. EPA sought this “newfound power” in

an ancillary provision of the Clean Air Act that “had rarely been used in the preceding

decades.” Id. And the agency’s exercise of authority “allowed it to adopt a regulatory

program that Congress had conspicuously and repeatedly declined to enact itself.” Id.

None of these factors is present here. FinCEN’s guidance does not represent an

expansion of regulatory authority into some unforeseen area of the economy or an area

beyond the agency’s normal expertise and subject matter. By regulating money

transmitting businesses that use bitcoin, FinCEN is simply applying its existing

regulatory authority to a different type of funds. Regulating money transmitting

businesses that exchange bitcoin for fiat currency therefore fits squarely within FinCEN’s

“congressionally assigned mission and expertise.” West Virginia, 142 S. Ct. at 2623

(Gorsuch, J., concurring).

Nor is FinCEN “attempt[ing] to deploy an old statute focused on one problem to

solve a new and different problem,” which “may be a warning sign that it is acting

without clear congressional authority.” Id. The “problem” here is neither new nor

different and the statute has been used to solve these exact problems since its inception.

The same could not be said in other recent major questions cases. For example, the CDC

(a public health agency) did not have statutory authority to regulate the housing market

through an eviction moratorium. See Alabama Ass’n of Realtors v. Dep’t of Health &

Hum. Servs., 141 S. Ct. 2485, 2488-89 (2021). And OSHA (an agency charged with

regulating workplace safety) did not have the authority to set the “broad public health

27 measure” of a COVID vaccine mandate. See Nat’l Fed’n of Indep. Bus. v. Dep’t of Lab.,

Occupational Safety & Health Admin., 142 S. Ct. 661, 665 (2022).

Moreover, while Congress recently amended § 5330(d) to explicitly encompass

businesses that transmit virtual currencies, it has not “considered and rejected” such bills

in the past. If it had, that would suggest that FinCEN was attempting a regulatory work

around these prior legislative failures. Congress instead amended the statute in 2021 to

allow FinCEN “to continue” its regulatory objectives of “safeguard[ing] the financial

system from illicit activity, counter[ing] money laundering and the financing of terrorism,

and promot[ing] national security” and address the fact that criminals are “increasingly

rely[ing] on [virtual currencies] . . . to move illicit funds.” Pub. L. No. 116-283, 134 Stat.

3388, 4552 (2021) (emphasis added). The amendment therefore reinforced and clarified

FinCEN’s existing regulatory authority; it did not create new, previously unrecognized

authority. As a result, to the extent the major questions doctrine applies to FinCEN’s

actions, the agency did not violate the doctrine’s core principles. Freeman’s motion to

dismiss and Rule 29 motion for judgment of acquittal on the unlicensed money

transmitting business counts are therefore denied for these additional reasons.

B. Remainder of Freeman’s motion for judgment of acquittal

Freeman also moves for judgment of acquittal as to the remaining counts in the

Superseding Indictment (Counts 3-8). The court grants the motion with respect to the

28 money laundering count (Count 3) as detailed below, and otherwise denies the motion for

the reasons stated on the record and in the prosecution’s briefs and oral argument.35

The money laundering charge is brought under 18 U.S.C. § 1956(a)(3)(B), which

makes it a federal crime for an individual:

with the intent . . . to conceal or disguise the nature, location, source, ownership, or control of property believed to be the proceeds of specified unlawful activity . . . [,] [to] conduct[ ] or attempt[ ] to conduct a financial transaction involving property represented to be the proceeds of specified unlawful activity, or property used to conduct or facilitate specified unlawful activity . . . .

As previously discussed, the prosecution charges Freeman with money laundering based

on an undercover agent’s August 25, 2020 transaction at one of Freeman’s bitcoin

exchange machines, located at Thirsty Owl in Keene, New Hampshire. Freeman argues

that the money laundering conviction cannot stand, as the prosecution did not provide

sufficient evidence that Freeman knew that the August 25 transaction took place.

This argument hinges on the mens rea requirement that attaches to the criminal

actus reus of “conduct[ing] a financial transaction.” On its face, the statute is silent as to

whether conviction requires that the defendant have knowledge that a money laundering

transaction occurred. In construing criminal statutes, however, courts do not treat such

silence as dispositive, given the “longstanding presumption, traceable to the common

law, that Congress intends to require a defendant to possess a culpable mental state

regarding ‘each of the statutory elements that criminalize otherwise innocent conduct.’”

35 See Prosecution Objection to the Rule 29 Motion (doc. no. 266); Prosecution Response to the Rule 29 Motion (doc. no. 254); Trial Tr. Day 8 Morning (doc. no. 282) at 48:1-81:9 (oral argument on the Rule 29 motion).

29 Rehaif v. United States, 139 S. Ct. 2191, 2195 (2019) (quoting United States v. X-

Citement Video, Inc., 513 U.S. 64, 72 (1994)). Accordingly, where criminal statutes are

“silent on the required mental state[,]” courts “read into [the] criminal statute[ ] . . . that

mens rea which is necessary to separate wrongful conduct from otherwise innocent

conduct.” Ruan v. United States, 142 S. Ct. 2370, 2377 (2022) (quoting Elonis v. United

States, 575 U.S. 723, 736 (2015)). Specifically, “the mens rea [courts] have read into

such statutes is often that of knowledge or intent.” Id. (citing cases). Applying this

principle here, Freeman cannot be convicted of money laundering unless he knowingly

conducted a prohibited financial transaction, which includes possessing knowledge that

the August 25 transaction occurred. Significantly, the prosecution agrees with this

reading of the statute. Indeed, the Superseding Indictment alleged that Freeman

“knowingly conducted”36 the August 25 transaction, and the jury instructions repeated the

same language without objection from the prosecution.37

Having established the culpable mental state required under the statute, the court

turns to the evidence and the parties’ arguments regarding its sufficiency. The parties

submitted briefs on the Rule 29 motion for acquittal following Freeman’s conviction.

With respect to the money laundering count, the prosecution essentially argued that

36 Doc. no. 139 at ¶ 31 (emphasis added). 37 See Final Jury Instructions (doc. no. 256) at 31 (“Count 3 of the Indictment charges Mr. Freeman with the crime of money laundering. The Indictment charges that, on or about August 25, 2020, . . . the defendant knowingly conducted a financial transaction involving property represented by an authorized agent of the United States government to be proceeds of unlawful activity . . . .”).

30 Freeman participated in the August 25 transaction by giving the undercover agent

permission to use the Thirsty Owl machine, with knowledge that the agent’s purpose in

purchasing bitcoin was to hide the source of illegal funds.38 The prosecution’s initial

briefing did not focus, however, on whether Freeman knew that the August 25 transaction

actually took place, as opposed to whether it was intended to conceal or disguise. Given

that this is a close call, the court permitted the parties to submit supplemental briefing on

this specific issue.

In its supplemental brief, the prosecution recognized that it must prove that

Freeman “knowingly participated in a financial transaction” under the statute.39

Tellingly, in reciting supporting evidence adduced at trial, the prosecution continued to

focus on Freeman’s grant of permission to the agent to use the machine and the intent to

conceal illegal funds—not on Freeman’s knowledge that the transaction in fact occurred.

For example, the prosecution pointed out, and the evidence shows, that Freeman

told the agent about his bitcoin exchange machines and assured him that he could

purchase large values of bitcoin through the machines anonymously. Freeman also

expressed that he had “general knowledge that his machines were used to launder funds

and facilitate frauds.”40 Further, after learning of the illegal source of the agent’s funds,

38 This “intent . . . to conceal or disguise the nature, location, source, ownership, or control of” the subject funds involves a second, specific mens rea under the money laundering statute. 18 U.S.C. § 1956(a)(3)(B). Freeman does not argue that the evidence was insufficient to prove that element, and it is thus not the subject of this motion. 39 Prosecution Supp. Br. (doc. no. 316) at 1. 40 Id. at 5.

31 Freeman spoke cryptically about continuing to sell bitcoin to the agent. Freeman asserted

that he could not knowingly permit further transactions, and he placed emphasis on the

word “knowingly,” but he did not clearly and directly refuse to sell to the agent. Viewing

“the communications in their entirety,” the prosecution argued that “it was a rational

construction of the evidence for the jury to conclude that the defendant provided the

officer with a wink-and-nod to use the machine when he said, ‘I can’t tell you that you

can use [that].’”41

True enough. But noticeably absent in the evidence presented at trial and

highlighted by the prosecution is proof that Freeman knew that the August 25 transaction

occurred. Indeed, Freeman did not witness the August 25 transaction personally, as he

was some miles away from where it took place. Nor is there evidence showing, or

creating the inference that, someone else (including the undercover agent himself)

witnessed the transaction and informed Freeman of it. Further, at trial, the prosecution

presented financial records and documents seized from Freeman’s home and home office.

If these records were in Freeman’s possession and confirmed that the August 25

transaction occurred, the jury arguably could have inferred that Freeman possessed the

requisite knowledge regarding the transaction. But none of the records or documents

confirmed this key fact, a required element of proof.

Further, the prosecution has not argued, and it would be a mistake to argue, that

the evidence going to Freeman’s knowledge of the concealment of the source of the

41 Id.

32 subject funds implicitly proves knowledge of the transaction’s occurrence. Indeed, a

person can have full knowledge of an individual’s intent to conceal aspects of an

upcoming transaction without ever knowing that the transaction took place.

In analyzing this deficiency in the evidence, the court bears in mind that the

prosecution brought this charge based on an undercover operation. In this context, the

prosecution and the agent had ample opportunity to avoid this gap in their evidence by

having the agent communicate with Freeman after the transaction took place, to confirm

its occurrence. By all accounts, such a conversation did not occur. If it did occur, the

prosecution presented no evidence of it.

In the face of this failure of proof, the prosecution attempts to salvage the money

laundering charge through evidence of two occasions in January and February 2021, in

which Freeman alerted his “confederates” over Telegram that large transactions were

completed at bitcoin machines that were not the Thirsty Owl machine.42 The prosecution

argues that “[t]he jury could infer [from these communications] that the defendant

monitored the transactions into his machines and knew that a large transaction occurred

on August 25, 2020.”43 This evidence is not sufficient to support the conviction, and

instead arguably cuts against the prosecution’s position. The absence of comparable

evidence of Freeman’s communications regarding the sizable August 25 transaction

42 Doc. no. 316 at 6 n.2 (citing Trial Exs. 862, 863). 43 Id.

33 weighs against the inference that he was either: (1) monitoring the machine that day, or

(2) uncovered evidence that the transaction occurred.

As a final note, the court’s analysis and conclusion are not disturbed or affected by

the language in 18 U.S.C. § 1956(a)(3)(B) that makes it a crime to “attempt[ ] to conduct” a

money laundering transaction. The prosecution confirmed at trial that it did not charge

Freeman with an attempted money laundering offense.44 And the Superseding Indictment

did not track the statutory language by alleging that Freeman attempted to conduct a

transaction under the statute. Instead, it alleged that he knowingly conducted such a

transaction. Consistent with this, the prosecution does not argue that the evidence is

sufficient to convict Freeman of an attempted offense, which would have required proof

of Freeman’s “intent to commit the substantive offense[,]” along with a “substantial step

towards its commission.” United States v. Turner, 501 F.3d 59, 68 (1st Cir. 2007)

(internal quotation omitted).

In sum, based on the above construction of the subject statute, with which the

prosecution agrees, the money laundering count required proof beyond a reasonable

doubt that Freeman had knowledge that the August 25 transaction took place. The jury

was ultimately left without sufficient evidence of Freeman’s mental state on this matter.

The court accordingly grants the motion for judgment of acquittal as to Count 3.

44 Doc. no. 282 at 53:8-12.

34 Conclusion

For the reasons stated above, Freeman’s oral and written45 motions for judgment

of acquittal are GRANTED-IN-PART as to Count 3 and DENIED-IN-PART as to the

remaining counts. Freeman’s motion to dismiss46 is DENIED.

SO ORDERED.

Joseph N. Laplante United States District Judge

Dated: August 22, 2023

cc: Georgiana MacDonald, AUSA Seth R. Aframe, AUSA John J. Kennedy, AUSA Michael T. McCormack, AUSA Mark L. Sisti, Esq. Richard Guerriero, Esq.

45 Doc. no. 265. 46 Doc. no. 176.