United States v. London
Procedural entryThis page is a short order in United States v. London. Read the opinion of the Court — 66 F.3d 1227 →
Opinion
USCA1 Opinion
UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT FOR THE FIRST CIRCUIT
____________________
No. 93-1898
UNITED STATES,
Appellee,
v.
MICHAEL B. LONDON,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Mark L. Wolf, U.S. District Judge] ___________________
____________________
Before
Cyr, Circuit Judge, _____________
Coffin, Senior Circuit Judge, ____________________
and Bownes, Senior Circuit Judge. ____________________
____________________
Henry D. Katz for appellant. _____________
Nina S. Goodman, Attorney, with whom, David S. Kris, Attorney, ________________ ______________
Department of Justice, Criminal Division, Appellate Section, Donald K. _________
Stern, United States Attorney, Dina M. Chaitowitz, Assistant United _____ __________________
States Attorney, and Michael Kendall, Assistant United States ________________
Attorney, were on brief for appellee.
____________________
September 18, 1995
____________________
BOWNES, Senior Circuit Judge. After a trial that BOWNES, Senior Circuit Judge. _____________________
spanned the better part of two months, a jury convicted
defendant-appellant Michael B. London of conspiring to
conduct and actually conducting the affairs of an enterprise
through a pattern of racketeering activity ("RICO conspiracy"
and "RICO substantive"), money laundering, failing to file
currency transaction reports ("CTRs"), conspiring to commit
extortion, and aiding and abetting extortion. Subsequent to
the jury verdict, London also pleaded guilty to tax evasion.
For his crimes, London was sentenced to 188 months'
imprisonment and fined $500,000. In addition, he agreed to
forfeit $865,000.
In this appeal, London challenges his convictions,
arguing that the district court erred: (1) in failing to
suppress certain evidence relevant to his counts of
conviction; (2) in instructing the jury on the law regarding
failure to file CTRs; and (3) in failing to grant his motion
for a judgment of acquittal on the money laundering and RICO
counts. After carefully considering the parties' arguments,
we affirm.
I. I. __
A. Factual Background A. Factual Background ______________________
London operated Heller's Cafe ("Heller's), a bar in
Chelsea, Massachusetts. He also ran a check-cashing service,
known as M & L Associates ("M & L"), out of a small enclosed
-2- 2
area in the bar. M & L charged its customers a 1% or 1.5%
commission on each check cashed. Both Heller's and M & L had
at least one employee other than London.
The evidence at trial demonstrated that bookmakers
tended to frequent Heller's and to use M & L as a check-
cashing service. Sometimes, M & L cashed bookmaker checks
that banks would not accept. For example, some checks were
neither made out by nor payable to the bookmakers (or
bookmakers' agents) who were cashing them. Others were made
out either to fictitious names or to real persons or entities
who were not to receive the funds. London neither asked
about the names on the checks he cashed nor required that the
checks be endorsed. And before December 17, 1986 -- the day
on which federal agents executed a search warrant at
Heller's, see infra at 6 -- London never filed a CTR ___ _____
notifying the Internal Revenue Service ("IRS") of his many
currency transactions involving more than $10,000. See 31 ___
U.S.C. 5313(a) (requiring financial institutions to report
currency transactions in the manner prescribed by the
Secretary of the Treasury) and 31 C.F.R. 103.11(i)(3) ___
(check-casher is a financial institution) and 31 C.F.R. ___
103.22(a)(1) (financial institutions must report all currency
transactions involving more than $10,000 to the IRS).
London's operating procedures were a boon to his
bookmaker customers. Not only did London provide these
-3- 3
customers with an immediate and untraceable source of cash to
pay their various expenses (including gamblers' winnings), he
enabled them to accept checks from their own customers.
This, in turn, increased business volume, for the ability to
pay gambling debts by check encouraged gamblers to make
larger and more frequent bets. It also made it easier for
out-of-state gamblers to do business with local bookmakers,
and possible for some gamblers to pay debts with company
funds (and thereby gamble with money on which they paid no
taxes).
London's promotion of bookmaking often took a more
active form. In 1986, London operated a bookmaking operation
with one Kenny Miller. He also helped run one Dominic
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USCA1 Opinion
UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT FOR THE FIRST CIRCUIT
____________________
No. 93-1898
UNITED STATES,
Appellee,
v.
MICHAEL B. LONDON,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Mark L. Wolf, U.S. District Judge] ___________________
____________________
Before
Cyr, Circuit Judge, _____________
Coffin, Senior Circuit Judge, ____________________
and Bownes, Senior Circuit Judge. ____________________
____________________
Henry D. Katz for appellant. _____________
Nina S. Goodman, Attorney, with whom, David S. Kris, Attorney, ________________ ______________
Department of Justice, Criminal Division, Appellate Section, Donald K. _________
Stern, United States Attorney, Dina M. Chaitowitz, Assistant United _____ __________________
States Attorney, and Michael Kendall, Assistant United States ________________
Attorney, were on brief for appellee.
____________________
September 18, 1995
____________________
BOWNES, Senior Circuit Judge. After a trial that BOWNES, Senior Circuit Judge. _____________________
spanned the better part of two months, a jury convicted
defendant-appellant Michael B. London of conspiring to
conduct and actually conducting the affairs of an enterprise
through a pattern of racketeering activity ("RICO conspiracy"
and "RICO substantive"), money laundering, failing to file
currency transaction reports ("CTRs"), conspiring to commit
extortion, and aiding and abetting extortion. Subsequent to
the jury verdict, London also pleaded guilty to tax evasion.
For his crimes, London was sentenced to 188 months'
imprisonment and fined $500,000. In addition, he agreed to
forfeit $865,000.
In this appeal, London challenges his convictions,
arguing that the district court erred: (1) in failing to
suppress certain evidence relevant to his counts of
conviction; (2) in instructing the jury on the law regarding
failure to file CTRs; and (3) in failing to grant his motion
for a judgment of acquittal on the money laundering and RICO
counts. After carefully considering the parties' arguments,
we affirm.
I. I. __
A. Factual Background A. Factual Background ______________________
London operated Heller's Cafe ("Heller's), a bar in
Chelsea, Massachusetts. He also ran a check-cashing service,
known as M & L Associates ("M & L"), out of a small enclosed
-2- 2
area in the bar. M & L charged its customers a 1% or 1.5%
commission on each check cashed. Both Heller's and M & L had
at least one employee other than London.
The evidence at trial demonstrated that bookmakers
tended to frequent Heller's and to use M & L as a check-
cashing service. Sometimes, M & L cashed bookmaker checks
that banks would not accept. For example, some checks were
neither made out by nor payable to the bookmakers (or
bookmakers' agents) who were cashing them. Others were made
out either to fictitious names or to real persons or entities
who were not to receive the funds. London neither asked
about the names on the checks he cashed nor required that the
checks be endorsed. And before December 17, 1986 -- the day
on which federal agents executed a search warrant at
Heller's, see infra at 6 -- London never filed a CTR ___ _____
notifying the Internal Revenue Service ("IRS") of his many
currency transactions involving more than $10,000. See 31 ___
U.S.C. 5313(a) (requiring financial institutions to report
currency transactions in the manner prescribed by the
Secretary of the Treasury) and 31 C.F.R. 103.11(i)(3) ___
(check-casher is a financial institution) and 31 C.F.R. ___
103.22(a)(1) (financial institutions must report all currency
transactions involving more than $10,000 to the IRS).
London's operating procedures were a boon to his
bookmaker customers. Not only did London provide these
-3- 3
customers with an immediate and untraceable source of cash to
pay their various expenses (including gamblers' winnings), he
enabled them to accept checks from their own customers.
This, in turn, increased business volume, for the ability to
pay gambling debts by check encouraged gamblers to make
larger and more frequent bets. It also made it easier for
out-of-state gamblers to do business with local bookmakers,
and possible for some gamblers to pay debts with company
funds (and thereby gamble with money on which they paid no
taxes).
London's promotion of bookmaking often took a more
active form. In 1986, London operated a bookmaking operation
with one Kenny Miller. He also helped run one Dominic
Isabella's bookmaking operation while Isabella was ill.
Finally, London acted as a "pay and collect" man for many of
his bookmaker customers, making payments to winning gamblers
and collecting payments from losers.
London also assisted Vincent Ferrara, the leader of
an organized crime group, in collecting "rent" (i.e.,
protection money) from bookmakers. London identified certain
of his bookmaker customers to Ferrara, telling him "anybody I
get you get." London then summoned the bookmakers to
Heller's to meet with Ferrara, who demanded that they pay him
anywhere from $500 to $1000 (or more) per month for
"protection" and help in debt collection. London collected
-4- 4
rent payments and, at least once, passed along a request for
debt collection assistance from a bookmaker who had been
induced to accept Ferrara's protection.
As stated above, London never filed a CTR with the
IRS prior to the execution of the search warrant on
December 17, 1986. From December 18, 1986, through
December 31, 1988, however, he filed 211 CTR's on behalf of M
& L. Although London had instructed his customers to make
certain that each check was for less than $10,000, London did
cash individual checks that were in amounts greater than
$10,000. When he cashed a group of checks for the same
customer, London would often deposit the checks on different
days or in different bank accounts. There was testimonial
evidence tending to indicate that London was aware of the
statutory and regulatory reporting requirements during the
period in which he failed to file any CTRs with the IRS.
B. Procedural History B. Procedural History ______________________
On October 28, 1986, in response to an application
and affidavit made pursuant to an on-going investigation of
London, his businesses, and his associates, the district
court issued two orders authorizing the government to conduct
electronic surveillance at Heller's. The first order
authorized, for a thirty-day period, the interception of oral
communications in and adjacent to the enclosed area in which
M & L operated; the second authorized, also for a thirty-day
-5- 5
period, the recording of wire communications made from two
telephones located behind the bar. In order to minimize the
interception of otherwise non-interceptable communications,
the court's orders limited surveillance to times when named
targets of the investigation were on Heller's premises. On
December 3, 1986, the court extended each of the orders for
an additional thirty days. Evidence derived from these
interceptions was introduced against London at trial.
On December 17, 1986, federal agents applied to a
magistrate judge for a warrant authorizing them to search
Heller's for evidence of unlawful gambling, loansharking,
distribution of narcotics, money laundering, and failure to
file CTRs. The magistrate judge issued the warrant,
authorizing the agents to search "Heller's Cafe, which
occupies the first floor and basement of 110 Chestnut Street"
and to seize "books and records, ledgers, correspondence,
notes, slips, checks and any other documents, including bank
records, which reflect unlawful gambling, loansharking,
narcotics distribution, and failure to file currency
transaction reports; and U.S. currency which constitutes
proceeds of these offenses." The agents executed the warrant
later that day, and seized, inter alia, almost all of the _____ ____
records found in the enclosed area from which M & L operated.
Evidence seized in the course of this search was introduced
against London at trial.
-6- 6
On April 11, 1990, a federal grand jury returned a
two-count indictment charging London with income tax evasion.
On May 10, 1990, the grand jury returned a fifty-one count
superseding indictment charging London with, inter alia, the _____ ____
counts of conviction: one count of RICO conspiracy, 18
U.S.C. 1962(d); one count of RICO substantive, 18 U.S.C.
1962(c); twelve counts of money laundering, 18 U.S.C.
1956(a)(1); twelve counts of failing to file CTRs, 31 U.S.C.
5313(a) and 5322(b); one count of conspiring to commit
extortion, 18 U.S.C. 1951; two counts of aiding and
abetting extortion, 18 U.S.C. 2 and 1951; and one count of
tax evasion for tax year 1985, 26 U.S.C. 7201. On
September 5, 1991, the grand jury returned a second
superseding indictment which charged no new offenses but
brought the indictment within the purview of the United
States Sentencing Guidelines by extending the period of the
alleged RICO conspiracy to after November 1987.
On August 17, 1992, the district court orally
denied London's previously-filed motion to suppress the
evidence seized during the December 17, 1986, search of
Heller's. On August 18, 1992, the court issued a written
memorandum and order denying London's previously-filed motion
to suppress the fruits of the electronic surveillance.
Trial commenced on January 4, 1993, and concluded
on February 19, 1993, when the jury returned guilty verdicts
-7- 7
on the counts of conviction listed above. The other counts
contained in the second superseding indictment either had
been dismissed by the government prior to trial or were
dismissed by the district court at trial. In addition, the
jury acquitted London on one money laundering count. On June
30, 1993, the district court sentenced London. This appeal
followed.
II. II. ___
As set forth above, London's appellate arguments
fall into three main groups. First, London takes issue with
the district court's denial of his suppression motions.
Second, London challenges the jury instructions given in
connection with the counts of the second superseding
indictment charging him with failing to file CTRs. Third,
London makes sundry arguments that there was insufficient
evidence to support his money laundering and RICO
convictions. We discuss each of London's arguments in turn.
A. Denial of the Motion to Suppress the Fruits of the A. Denial of the Motion to Suppress the Fruits of the _____________________________________________________________
Electronic Surveillance Electronic Surveillance _______________________
London contends that the district court erred in
denying his motion to suppress the fruits of the electronic
surveillance conducted at Heller's in 1986. He claims that
the aforementioned surveillance ran afoul of Title III of the
Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C.
2510 et seq. ("Title III") -- the federal statute that __ ____
governs electronic surveillance -- in five ways: (1) no
-8- 8
Department of Justice official designated in 18 U.S.C.
2516(1) had authorized the local United States Attorney to
apply for the initial interception orders; (2) the orders
improperly allowed the government to monitor conversations
relating to money laundering, which was not an offense for
which interception could be ordered, see 18 U.S.C. ___
2516(1)(a)-(o), on the date the interception orders issued;
(3) the government intercepted and disclosed extortion-
related conversations -- conversations pertaining to the
paying of "rent" to Ferrara -- beyond the scope of the
court's orders; (4) the court ordered and the government
employed inadequate minimization procedures under 18 U.S.C.
2518(5); and (5) the government's application misled the
district court as to the necessity for conducting electronic
surveillance, in violation of 18 U.S.C. 2518(1)(c).
Because we are not persuaded by any of these arguments, we
affirm the district court's denial of the suppression motion.
1. Internal Authorization under 18 U.S.C. 1. Internal Authorization under 18 U.S.C. ___________________________________________________
2516(1) 2516(1) _______
Title III compels local prosecutors to obtain
internal authorization from a statutorily-designated Justice
Department official prior to applying for a judicial
interception order. 18 U.S.C. 2516(1). Failure to comply
with this "central" provision of Title III requires
-9- 9
suppression of the fruits of the unauthorized interception.
United States v. Giordano, 416 U.S. 505, 524-29 (1974). As _____________ ________
noted, London contends that the initial interception
application was not authorized by a statutorily-designated
Justice Department official. London is mistaken.
The government attached to its initial interception
application the first page of a two-page authorization
memorandum prepared on October 24, 1986, by William F. Weld,
then the Justice Department's Assistant Attorney General for
the Criminal Division, and the second page of the cover
letter which accompanied the Weld memorandum, which was
signed for Weld by Frederick D. Hess, the Justice
Department's Director of the Office of Enforcement Operations
of the Criminal Division. It is undisputed that Weld was a
statutorily-designated official and Hess was not. In
rejecting London's suppression motion, the district court
found that Weld had authorized the interception application
(as the application had stated) and that "the government
committed a collating error by providing page one of the Weld
approval letter followed by page two of a separate letter
written by Hess to Robert S. Mueller, III, Acting United
States Attorney for the District of Massachusetts."
London does not dispute the accuracy of the
district court's "collating error" finding; nor does he
disagree that the finding would validate the application if
-10- 10
the district court was empowered to look beyond the face of
the application in deciding whether there had been proper
authorization. Relying on United States v. Chavez, 416 U.S. ______________ ______
562 (1974), and United States v. O'Malley, 764 F.2d 38 (1st ______________ ________
Cir. 1985), he instead argues that the finding cannot save
the government's application because the district court was
limited to a "facial analysis" of the authorization in
determining whether a statutorily-designated official had
approved the interception application. Even if his
construction of Chavez and O'Malley is correct (an issue on ______ ________
which we express significant doubt but no formal opinion),
the facial analysis London advocates reveals that Weld -- and
not Hess -- authorized the interception application.
London's argument hinges entirely on the fact that
Hess signed on behalf of Weld the second page of the
miscollated authorizing papers that were attached to the
interception application. What it neglects to take into
account, however, is that Weld signed the first page, which ____
states at the top that it is a memorandum from "William F.
Weld, Assistant Attorney General, Criminal Division."
Furthermore, that same first page clearly indicates that the
Assistant Attorney General in charge of the Criminal Division
(i.e., Weld) authorized the application:
By virtue of the authority vested in
him by Section 2516 of Title 18, United
States Code, the Attorney General of the
United States has by Order Number 1088-
-11- 11
85, dated March 28, 1985, specially
designated the Assistant Attorney General
in charge of the Criminal Division to
authorize applications for court orders
authorizing the interception of wire or
oral communication. As the duly
appointed Assistant Attorney General in
charge of the Criminal Division, this
power is exercisable by me. WHEREFORE,
acting under this delegated power, I
hereby authorize the above-described
[London] application to be made by any
investigative or law enforcement officer
of the United States as defined in
Section 2510(7) of Title 18, United
States Code.
Finally, nothing in the text of either page of the papers
presented to the district court even remotely suggests that
Hess, and not Weld, authorized the application.
We therefore reject London's argument that the
initial interception application was not authorized by a
statutorily-designated Justice Department official.
2. Interception of Conversations Relating to 2. Interception of Conversations Relating to _____________________________________________
Money Laundering Money Laundering ________________
Title III specifies the offenses for which an
interception order may issue. 18 U.S.C. 2516(1)(a)-(o).
Money laundering in violation of 18 U.S.C. 1956 was so
specified by legislation that became effective October 27,
1986. Pub. L. 99-570, Title I, 1365(c), Oct. 27, 1986, 100
Stat. 3207-35. As noted, London argues that the initial
interception orders authorized the interception of
conversations relating to money laundering prior to the date
on which money laundering was added to 18 U.S.C. 2516(1)'s
-12- 12
list of offenses. Even if we assume arguendo that the ________
initial interception orders did authorize the interception of
conversations relating to money laundering in violation of 18
U.S.C. 1956 (a position with which the government
forcefully disagrees and on which we take no position),
London's argument lacks a factual basis.
London claims that the district court's initial
interception orders issued on October 24, 1986, three days
before money laundering became a predicate offense under 18
U.S.C. 2516(1). The record reveals, however, that the
initial interception orders issued on October 28, 1986, not
October 24, 1986. Thus, money laundering in violation of 18
U.S.C. 1956 was an offense for which an interception order ___
could issue at the time of the initial interception orders
issued in this case.
We therefore reject London's argument that the
initial interception orders authorized the interception of
conversations relating to money laundering at a time when
money laundering was not a predicate offense under 18 U.S.C.
2516(1).
3. Interception and Disclosure of Extortion- 3. Interception and Disclosure of Extortion- ___________________________________________________
Related Related _______
Conversations Conversations _____________
With certain exceptions, Title III prohibits the
interception and disclosure of conversations other than those
relating to the offenses specified in the district court's
-13- 13
interception order. See generally 18 U.S.C. 2511, 2517, ___ _________
and 2518(4)(c). As noted, London argues that the government
wrongfully intercepted and disclosed certain extortion-
related conversations (i.e., conversations concerning the
paying of "rent" to Ferrara) despite the fact that the
district court's initial interception orders did not specify
extortion in violation of 18 U.S.C. 1951 as a target
offense. London's claim of governmental overreaching in this
context is without merit.
Unlike London's first two arguments, the instant
one is not built upon a faulty factual basis; extortion in
violation of 18 U.S.C. 1951 was not a target offense listed
in the government's interception applications or the district
court's interception orders. This fact alone, though, does
not make the interception of the "rent" conversations
unlawful. Title III clearly contemplates that law
enforcement officials will, in the course of intercepting
conversations related to specified target offenses, intercept
conversations "relating to offenses other than those
specified in the order of authorization or approval." See 18 ___
U.S.C. 2517(5). For example, an intercepted conversation
can relate to both a specified offense and to an unspecified ___
offense. In such a situation, the interception is unlawful
only when it is motivated by an illicit purpose -- e.g.,
"subterfuge" interceptions where the government applies to
-14- 14
intercept conversations relating to offenses specified in 18
U.S.C. 2516(a)-(o) while intending to intercept
conversations relating to offenses for which interceptions
are unauthorized or for which it has no probable cause to
obtain an interception order. See United States v. Angiulo, ___ _____________ _______
847 F.2d 956,980 (1st Cir.), cert.denied, 488 U.S. 852(1988). ___________
Here, the intercepted "rent" conversations clearly
related to at least one offense -- operating a gambling
business in violation of 18 U.S.C. 1955 -- specified in the
initial authorization orders. The victims of the
rent/extortion scheme were bookmakers involved in illegal
gambling, and the intercepted conversations provided a means
of identifying them. Moreover, the district court
supportably found that there was no subterfuge involved in
the initial interception applications. See Angiulo, 847 F.2d ___ _______
at 980 (clear-error reviewing standard applicable to finding
that government's wiretap application was not subterfuge).
Extortion, after all, is an enumerated offense under 18
U.S.C. 2516, and there would have been no need for the
government to engage in subterfuge unless it suspected that
extortion was taking place but lacked the probable cause
necessary to intercept conversations pertaining to extortion.
London makes no argument along these lines, and the record
does not suggest this sort of governmental deception. The
-15- 15
government's interception of the "rent" conversations was
therefore not unlawful.
We still must consider whether the government acted
unlawfully in disclosing the rent conversations during the
proceedings below. The government argues that the disclosure
of such "other offense" evidence is permissible so long as
the information is related to an offense listed in the
initial authorization orders. Cf. United States v. Shields, ___ _____________ _______
999 F.2d 1090, 1097 (7th Cir. 1993) ("Since the government
was free to release this information to a grand jury anyway
under the [authorization for the offenses listed in the Title
III order], it is difficult to see how the defendants were
harmed when the same facts were presented in the context of
different offenses."), cert. denied, 115 S. Ct. 515 (1994). _____ ______
We need not reach the merits of this argument, however,
because we conclude that the district judge who issued the
initial interception orders impliedly and permissibly
authorized the disclosure of the conversations at issue.
Under 18 U.S.C. 2517(5), the government may
secure a court's blessing to disclose the contents of an
"other offense" interception in connection with a federal
prosecution. The relevant statutory provision permits
disclosure when the interception has been "authorized or
approved by a judge of competent jurisdiction where such
judge finds on subsequent application that the contents were
-16- 16
otherwise intercepted in accordance with the provisions of
[Title III]. Such application shall be made as soon as
practicable." Id. It is settled that disclosure ___
authorization "can be implicitly obtained when a judge grants
a renewal of a wiretap after being advised of the essential
facts of the unspecified violation." United States v. ______________
McKinnon, 721 F.2d 19, 23-24 (1st Cir. 1983). In other ________
words, "the disclosure in subsequent affidavits to the
issuing judge of material facts constituting or clearly
relating to other offenses satisfies the Government's
obligation to seek judicial authorization for the disclosure
and use of evidence inadvertently intercepted." Id. at 24 ___
(citations and internal quotation marks omitted).
As the district court found in denying London's
suppression motion, there was implicit authorization in this
case. When the government applied for extensions of the
initial interception orders, its attached affidavit advised
the court of interceptions containing the essential facts of
the extortion violations:
London acts as a bank and account keeper
for other bookmaking and loansharking
operations . . . . [Also] London's
illegal businesses, and the illegal
businesses for which London keeps the
accounts, only operate with the consent
and protection of certain other persons,
to whom London and others pay a
percentage of their income . . . .
Further electronic surveillance is
necessary, however, to identify the
balance of the members of each
-17- 17
organization and the relationship between
London, these organizations, and the
persons to whom `rent' is paid, as
discussed below.
The attached affidavit then detailed London's relationship
with Ferrara. Thus, the court's approval of the extension
application constituted both an implicit finding that the
extortion-related conversations were intercepted in
accordance with the provisions of Title III and permission
for the subsequent disclosure of the conversations. See ___
McKinnon, 721 F.2d at 23-24. ________
London complains that the affidavit not only failed
to seek approval for subsequent interceptions of extortion-
related conversations, but it also failed to alert the court
that some of the intercepted conversations related to "other
offense" evidence. While we certainly think it advisable
that the government provide issuing courts with this type of
notice, we note that it is not a sine qua non of implicit ____ ___ ___
authorization. We presume that the court read the supporting
affidavit with care, and took seriously its obligation to
police the interceptions that were taking place. We require
no more to infer implicit authorization. Cf. id. at 23 ___ ___
(supporting affidavits describing communications related to
other offenses sufficient to ground "reasonable . . .
conclu[sion]" that issuing judge approved of their
interception); see also United States v. Masciarelli, 558 ___ ____ _____________ ___________
F.2d 1064, 1068 (2d Cir. 1977) ("[W]e presume . . . that in
-18- 18
renewing . . . the tap the judge carefully scrutinized th[e]
supporting papers and determined that the statute's
requirements had been satisfied.") (citation and internal
quotation marks omitted).
We therefore reject London's argument that the
interception and disclosure of the extortion-related
conversations violated Title III.
-19- 19
4. Minimization under 18 U.S.C. 2518(5) 4. Minimization under 18 U.S.C. 2518(5) __________________________________________
Title III requires the government to conduct
electronic surveillance "in such a way as to minimize the
interception of communications not otherwise subject to
interception." 18 U.S.C. 2518(5). Without specifying any
wrongfully intercepted conversations, London asserts that
there was inadequate governmental minimization during the
interceptions at Heller's. Although London's argument on
this issue is a bit disjointed, two alleged inadequacies
emerge from his brief: (1) the court's order permitting
surveillance whenever a named target was on Heller's premises
(instead of a more restrictive order); and (2) the
government's policy of recording all conversations carried
out in Spanish unless and until a bilingual agent was
available to make minimization decisions. In the
circumstances of this case, we see no error in either the
court's order or the government's policy regarding
communications in Spanish.
In assessing whether the government's minimization
efforts pass muster under 18 U.S.C. 2518(5), we make an
objective assessment in light of the facts and circumstances
known to the government at the relevant points in time. See ___
Scott v. United States, 436 U.S. 128, 136-37 (1978). When _____ _____________
making this assessment, we tend to focus on (1) the nature
and complexity of the suspected crimes; (2) the thoroughness
-20- 20
of the government's precautions to bring about minimization;
and (3) the degree of judicial supervision over the
surveillance process. United States v. Uribe, 890 F.2d 554, _____________ _____
557 (1st Cir. 1989); Angiulo, 847 F.2d at 979. We also are _______
mindful that Title III "does not forbid the interception of
all nonrelevant conversations, but rather instructs the
agents to conduct the surveillance in such a manner as to
`minimize' the interception of such conversations." Scott, _____
436 U.S. at 140. This means that "[t]he government is held
to a standard of honest effort; perfection is usually not
attainable, and is certainly not legally required." Uribe, _____
890 F.2d at 557.
London's minimization arguments do not call into
question any specified acts of the intercepting agents;
instead, they implicate the thoroughness of certain of the
court's and government's minimization precautions. In other
words, they amount to claims that an implicit requirement
allegedly imposed on the government by Uribe and Angiulo -- _____ _______
that the government's precautions to bring about minimization ___________
be sufficiently "thorough" to pass muster under 18 U.S.C.
2518(5) -- has not been met in this case, and that
suppression of all intercepted conversations is the
appropriate remedy. Even if we assume arguendo that London ________
can win total suppression without challenging the propriety
-21- 21
of any particular interceptions, we see no merit in his
arguments.
London characterizes as insufficient the court's
"targeted individual must be on the premises" limitation by
-22- 22
stating:
Perhaps, an undercover agent acting as a
patron, could [have] signal[led] when a
target was talking on a particular
telephone or near one of the bugs and
thereby minimize[d] the intrusion into
the privacy of innocent persons
conversing at other locations. Perhaps
monitoring agents could have been
directed to cease monitoring at any
device when a target was not heard on
that device.
He has not, however, effectively rebutted the government's
colorful assertion, made both to the district court and on
appeal, that "had an undercover agent remained inside the
small, intimate . . . Heller's Cafe to relay a signal every
time a target spoke into a surveillance device, London would
have identified him as quickly as Ali Baba in his cave would
have spotted a spy among his chosen forty." Nor has he
rebutted the government's sworn assertion that "agents were
instructed to and did cease monitoring when they determined
that none of the targets was a party to [a] conversation or
that only personal, non-criminal activity was discussed." In
our view, the former of these two assertions is sufficient to
respond to London's argument that there should have been an
undercover agent inside Heller's, and the latter effectively
undermines any suggestion that the monitoring agents were
free to listen in on the conversations of non-targeted
individuals.
-23- 23
London's challenge to the government's policy
regarding Spanish conversations is answered more easily:
when an interpreter is not reasonably available, Title III
explicitly allows full-scale recording and post hoc ____ ___
minimization of conversations carried out in foreign
languages. See 18 U.S.C. 2518(5) ("In the event the ___
intercepted communication is in a code or foreign language,
and an expert in that foreign language or code is not
reasonably available during the interception period,
minimization may be accomplished as soon as practicable after
such interception."). Although the above-quoted statutory
provision was not yet effective at the time of the
interceptions here at issue (it was passed prior to the
interceptions but went into effect thereafter), its existence
as pending legislation renders objectively reasonable the
government's policy -- which tracked the legislation --
regarding intercepted conversations carried out in Spanish.
This was a complex case involving a sophisticated
defendant, complicated financial dealings, and links to
organized crime. In view of this, we cannot say that either
the complained-of minimization precautions or the other
minimization precautions ordered by the court and taken by
the government were so lacking in thoroughness that they
violated Title III.
-24- 24
We therefore reject London's minimization
arguments.
5. Necessity under 18 U.S.C. 2518(1)(c) 5. Necessity under 18 U.S.C. 2518(1)(c) __________________________________________
Title III dictates that the government's
interception application include "a full and complete
statement as to whether or not other investigative procedures
have been tried and failed or why they reasonably appear to
be unlikely to succeed if tried or to be too dangerous." 18
U.S.C. 2518(1)(c). We have interpreted this "necessity"
provision to mean that the statement should demonstrate that
the government has made "a reasonable, good faith effort to
run the gamut of normal investigative procedures before
resorting to means so intrusive as electronic interception of
telephone calls." United States v. Hoffman, 832 F.2d 1299, _____________ _______
1306-07 (1st Cir. 1987). London argues that the government's
application misled the court as to the need for electronic
surveillance by failing to mention that the government had
not engaged in the following investigative techniques: (1)
subpoenaing London's bank records; (2) utilizing two
confidential informants -- Francis McIntyre and John DeMarco
-- allegedly available to it; and (3) placing undercover
agents inside of Heller's. London's claims are not
convincing.
The first and third of London's claims are
difficult to fathom, as the affidavit attached to the
-25- 25
interception application indicated both that the government
did review London's bank records (during an unrelated ___
investigation) prior to applying for the interception orders
and that undercover infiltration was not available because
"surveillance observations have disclosed a high degree of
consciousness by London and others to the possibility of law
enforcement scrutiny" and because London "requires two known
references prior to engaging in illegal transactions with a
person." Other than making the general and unpersuasive
argument that "visual surveillance by undercover agents" was ___
possible because Heller's "was fully accessible to the public
eye" and had no "back rooms," London has not taken issue with
the affidavit statements. See supra at 21 (noting, in a ___ _____
different context, London's failure to rebut the government's
explanation why undercover agents could not insinuate
themselves into Heller's). And he certainly has not
explained how the affidavit statements themselves may have
been misleading. We consequently see no factual basis for
London's first and third claims.
As to the claim that the government misleadingly
failed to disclose the availability of McIntyre and DeMarco
as informants, London has not even attempted to rebut, by
pointing to contrary evidence, the district court's findings
that, at the time of the initial application, the government
reasonably believed (1) that McIntyre would not testify
-26- 26
against London; and (2) that DeMarco's "investigatory
potential . . . [was] immaterial to the investigation at
Heller's." In light of this, we cannot say that these
findings are clearly erroneous. See United States v. ___ ______________
Schiavo, 29 F.3d 6, 8 (1st Cir. 1994) (findings of fact made _______
after suppression hearing reviewed for clear error). And the
findings plainly undermine London's contention that the
failure to disclose McIntyre's and DeMarco's alleged
investigatory potential violated 18 U.S.C. 2815(1)(c).
We therefore reject London's argument that the
government misled the district court as to necessity when
applying for the initial interception orders.
B. Denial of the Motion to Suppress the Evidence Seized B. Denial of the Motion to Suppress the Evidence Seized _____________________________________________________________
During During ______
the December 17, 1986, Search of Heller's the December 17, 1986, Search of Heller's _________________________________________
London argues that the district court erred in
denying his motion to suppress the evidence seized pursuant
to the December 17, 1986, search of Heller's -- i.e., almost
all of M&L's business records, some of Heller's business
records, and a significant amount of cash on the premises of
Heller's that day. He characterizes as unconstitutionally
overbroad the warrant's description of items to be seized:
"books and records, ledgers, correspondence, notes, slips,
checks and any other documents, including bank records, which
reflect unlawful gambling, loansharking, narcotics
distribution, and failure to file currency transaction
-27- 27
reports; and U.S. currency which constitutes proceeds of
these offenses." He also argues that the officials who
executed the search could not have held an objectively
reasonable belief that the overbroad language in the search
warrant was constitutional. Because we disagree with the
latter of London's two arguments, we repudiate his assignment
of errorwithout assessingthe constitutionality ofthe warrant.
It is well settled that "suppression is appropriate
only if the officers were dishonest or reckless in preparing
[the warrant] affidavit or could not have harbored an
objectively reasonable belief in the existence of probable
cause." United States v. Leon, 468 U.S. 897, 926 (1984). ______________ ____
Here, London has not challenged the preparation of the
warrant affidavit, identified any documents which allegedly
were seized without probable cause, or argued that the
executing agents exceeded the warrant's scope. Nor has he
asserted that there was an absence of probable cause for some ____
sort of warrant to have issued. Assuming arguendo that ____ ________
London might still be entitled to suppression without having
made any of these arguments, our inquiry reduces to whether
the description of items to be seized was so facially
defective that an objectively reasonable officer would have
known of the warrant's unconstitutionality. We hardly think
so.
-28- 28
Even if the description of items to be seized might
have been more particular, it was not patently overbroad when
viewed in context. London operated a complex criminal
enterprise where he mingled "innocent" documents with
apparently-innocent documents which, in fact, memorialized
illegal transactions. London also intermingled his
legitimately-obtained and innocently-obtained currency. It
therefore would have been difficult for the magistrate judge
to be more limiting in phrasing the warrant's language, and
for the executing officers to have been more discerning in
determining what to seize. In similar circumstances, we have
stated:
We must . . . recognize that the inherent
difficulty in segregating "good" from
"bad" records, and consequently in
drawing up an adequately limited warrant,
makes it difficult for even a reasonably
well-trained officer, who is not expected
to be a legal technician and is entitled
to rely on the greater sophistication of
the magistrate -- to know precisely where
to draw the line.
United States v. Diaz, 841 F.2d 1, 6 (1st Cir. 1988) ______________ ____
(overturning a suppression order based on an overbroad search
warrant). Like Diaz, the question whether the description of ____
items to be seized was unconstitutionally overbroad was, at
best, close, and the executing officers were objectively
reasonable in deferring to the magistrate judge's trained
judgment.
-29- 29
We therefore reject London's argument that all the
evidence seized during the December 17, 1986, search of
Heller's should have been suppressed.
C. Jury Instructions Regarding London's Failure to File CTRs C. Jury Instructions Regarding London's Failure to File CTRs _____________________________________________________________
London argues that we should vacate his convictions
for failing to file CTRs because the district court
erroneously informed the jury that London could be convicted
of the "willful" violation proscribed by 31 U.S.C. 5322(b)
if he had merely a reckless disregard of his legal duties
regarding the filing of CTRs. The government takes the
position that the court's instructions were incorrect in
light of Ratzlaf v. United States, 114 S. Ct. 655 (1994) _______ ______________
(knowledge of the illegality of one's actions is necessary to
sustain a conviction under 31 U.S.C. 5322) (illegal
structuring case), an opinion issued after London's trial,
but points to London's failure to object and contends that
the instructions do not constitute plain error under Fed. R.
Crim. P. 52(b) (defects not brought to the attention of the
trial court reviewed for plain error). London counters that
his failure to object cannot be considered a waiver because
the instructions were in complete accord with an en banc __ ____
decision of this court -- United States v. Aversa, 984 F.2d _____________ ______
493 (1st Cir. 1993) (en banc) (illegal structuring case), __ ____
vacated, 114 S. Ct. 873 (1994) -- that had been handed down a _______
mere one month prior to the jury instructions in this case.
-30- 30
Before addressing the issue of waiver, we must
inquire whether the present law of the circuit precludes a
determination of error even if London has not waived
objection to the instructions. In a recent decision, another
panel of this court expressed doubt as to whether Ratzlaf _______
overruled Aversa's alternative reckless disregard standard. ______
See United States v. Saccoccia, Nos. 93-1511/1560-63/1616- ___ _____________ _________
17/2206-07 and 94-1388/1507-08, slip op. at 27 (1st Cir. July
24, 1995). But this comment was only dictum. It was not
necessary to the Saccoccia panel's finding that the _________
instruction challenged in that case was not plainly _______
erroneous. Id. at 26-27 (noting the defendant's failure to ___
object). Nor was it implicitly or explicitly relied upon
when the panel held the evidence sufficient for the jury to
have found that the defendants "knew that their own
activities were unlawful." Id. at 32-33. The reckless ___
disregard standard therefore played no role in the Saccoccia _________
court's holding. We therefore feel that the question whether _______
Ratzlaf has impliedly left untouched or overruled Aversa _______ ______
remains to be decided--if the issue has not been waived.
Addressing the waiver issue we conclude that
London's failure to object was excusable under the
circumstances of this case. The government argues that,
despite the recency of the Aversa decision and the overall ______
state of the law at the time of his trial, London has waived
-31- 31
any argument that the aforementioned instructions were
erroneous. While acknowledging that waiver should not "be
inferred, and no plain error requirement imposed, where [a]
Supreme Court[] ruling comes out of the blue and could not
have been anticipated," see United States v. Weiner, 3 F.3d ___ _____________ ______
17, 24 n.5 (1st Cir. 1993), the government contends that the
split between this and the other ten circuits as to the
meaning of willfulness under 31 U.S.C. 5322 "made it likely
that the issue would be resolved by the Supreme Court" and
made it incumbent upon London to lodge an objection. In so
doing, the government relies on our recent decision in United ______
States v. Marder, 48 F.3d 564 (1st Cir.) (illegal structuring ______ ______
case), cert. denied, 115 S. Ct. 1441 (1995), where we _____ ______
indicated that defendant Marder's failure to object to a
5322 willfulness instruction given prior to Ratzlaf was _______
inexcusable. Id. at 572 n.5. Marder is not on-point, and ___ ______
the government's argument is not persuasive.
As an initial matter, Marder's trial occurred prior
to our decision in Aversa. Thus, the compelling scenario ______
presented here -- instructions mirroring exactly the holding
of a recent en banc opinion of the controlling circuit court __ ____
-- did not exist in that case. More importantly, however,
Marder's trial judge, without objection, erroneously
instructed the jury in accordance with the law in the other
circuits (i.e., that knowledge of the reporting requirements
-32- 32
was all that was needed to establish willfulness under 31
U.S.C. 5322) despite (1) the existence of authority in this ____
circuit indicating that knowledge of illegality was necessary
to establish willfulness under 5322, see Marder, 48 F.3d at ___ ______
572 n.5 (citing Bank of New England, 821 F.2d 844, 854 (1st ____________________
Cir.), cert. denied 484 U.S. 943 (1987))); and (2) our recent _____ ______
withdrawal of an on-point panel opinion and decision to hear
the Aversa case en banc, see id. In view of these ______ __ ____ ___ ___
circumstances, which should have put Marder on notice that
5322's willfulness criterion for illegal structuring might
imply something more than knowledge of the reporting
requirements, we deemed inexcusable Marder's failure to
object to the defective instructions. Id. We therefore ___
reviewed the instructions only for plain error. Id. ___
The situation presented in this case is in stark
contrast to that in Marder. As we have explained, the law of ______
this circuit was settled by nothing less than a newly-minted
en banc opinion at the time the trial judge instructed __ ____
London's jury. This fact alone goes a long way, if not the
whole way, towards excusing London's failure to object.
Moreover, at this same time, all eleven circuits had at least
implicitly indicated that a reckless disregard of legal
duties regarding the filing of CTRs was sufficient to
establish willfulness under 31 U.S.C. 5322. See Ratzlaf, ___ _______
114 S. Ct. at 665 n.3 (Blackmun, J., dissenting) (pointing
-33- 33
out the near-uniformity in the circuits that mere knowledge
of the reporting requirements is enough to establish
willfulness under 5322, and stating "[t]he only Court of
Appeals to adopt a contrary interpretation is the First
Circuit, and even that court allows reckless disregard of
one's legal duty to support a conviction for structuring")
(citation and internal quotation marks omitted).
Consequently, if we conclude that Ratzlaf implicitly held _______
that a reckless disregard of one's legal duties under the
reporting requirements is not enough to establish willfulness
under 5322, such a holding would be precisely the type of
unanticipated, "out of the blue" Supreme Court ruling we
alluded to in Weiner. We therefore must proceed to our ______
interpretation of the scope of Ratzlaf. _______
In Ratzlaf the trial court instructed the jury that _______
it could convict even if it found the defendant had no
knowledge of the anti-structuring statute but acted with the
purpose of circumventing a bank's reporting obligation. The
Court stated:
We hold that the "willfulness"
requirement mandates something more. To
establish that a defendant "willfully
violated" the antistructuring law, the
Government must prove that the defendant
acted with knowledge that his conduct was
unlawful.
114 S. Ct. at 656.
-34- 34
In Aversa, an en banc decision, we held that ______
"reckless disregard" of the law satisfied the willfulness
requirements of the structuring statute. 984 F.2d at 502.
In light of Ratzlaf, Aversa remains law in this circuit only _______ ______
if reckless disregard falls within Ratzlaf's concept of _______
"knowledge."
As we survey post-Ratzlaf law in the circuits, we _______
find one circuit which has adopted the standard of "actual
knowledge." United States v. Retos, 25 F.3d 1220, 1230 (3d _____________ _____
Cir. 1994). Other circuits -- none of whom, pre-Ratzlaf, had _______
required any knowledge of structuring laws -- have simply
echoed Ratzlaf's requirement of "knowledge." We are not _______
helped by these decisions, for we face a different problem:
having previously articulated a standard which posed what we
deemed essentially an equivalent to "knowledge," and which,
while recognized in Ratzlaf, was neither embraced nor _______
disavowed, shall we proclaim it now alive or dead?
In short, when should we apply the literal meaning
of a word used in a Supreme Court decision to a generic
circumstance that was not in controversy before the Court?
We begin with the general advice of Chief Justice Marshall in
Cohens v. Virginia, 6 Wheaton (19 U.S.) 264, 399-400 (1821): ______ ________
It is a maxim, not to be
disregarded, that general expressions, in
every opinion, are to be taken in
connection with the case in which those
expressions are used. If they go beyond
the case, they may be respected, but
-35- 35
ought not to control the judgment in a
subsequent suit when the very point is
presented for decision.
An application of this maxim, relevant to the
instant case, occurred in Armour & Co. v. Wantock, 323 U.S. ____________ _______
126, 132-34 (1944), where, notwithstanding a definition of
"work" in a prior Fair Labor Standards Act case as "physical ________
or mental exertion . . . controlled or required by the ___________________
employer," the Court, through Justice Jackson, held that a
company's private firefighters' idle or recreational time on
duty constituted working time. Justice Jackson explained:
[W]ords of our opinions are to be read in
the light of the facts of the case under
discussion. To keep opinions within
reasonable bounds precludes writing into
them every limitation or variation which
might be suggested by the circumstances
of cases not before the Court. General
expressions transposed to other facts are
often misleading.
Id. at 133; see also Reiter v. Sonotone Corp., 442 U.S. 330, ___ ___ ____ ______ ______________
341 (1979) (refusal to limit "business or property," as used
in 4 of Clayton Act, to "commercial interests or
enterprises," though so defined in prior Court opinion).
These and other such cases reflect the Court's
acknowledgement that "[p]rudence also dictates awaiting a
case in which the issue was fully litigated below, so that we
will have the benefit of developed arguments on both sides
and lower court opinions squarely addressing the question."
Yee v. Escondido, 503 U.S. 519, 538 (1992). Our position ___ _________
-36- 36
naturally follows: "[W]e do not normally take Supreme Court
opinions to contain holdings on matters the Court did not
discuss and which, presumably, the parties did not argue.
Sweeney v. Westvaco Co., 926 F.2d 29, 40 (1st Cir. 1991) _______ _____________
(Breyer, C.J.) (citing Cousins v. Secretary of the U.S. Dep't _______ ___________________________
of Transp., 880 F.2d 603, 608 (1st Cir. 1989) (en banc)). __________
We therefore adopt a restrained role. While we
might, if writing on a clean slate, accept the narrowest
interpretation of "knowledge," we will not easily conclude
that the Court has rejected our prior decision by ambiguous
inference or opaque implication. We would require a clear
signal.
We now look for signals. The case for "actual
knowledge" is the word itself -- expressing direct
acquaintance with a fact. This has the virtue of simplicity
in formulating instructions to a jury. We note, too, the
fact that the prosecution in our case conceded error, but
this does not relieve us of our obligation to make a de novo
decision. We do take cognizance that in Ratzlaf, the Court's _______
references to Aversa were on points other than the equation ______
of reckless disregard and knowledge-willfulness. And we also
take note of the majority's failure to respond to the
dissent's charge that the Court's decision repealed the
"reckless disregard" standard of Aversa. ______
-37- 37
Looking for contrary indications, we note first,
that the referent used most often by the Court was
"knowledge." "Actual knowledge" was used by the majority
only once, in a parenthetical reference to a 1980 Fifth
Circuit case. 114 S. Ct. at 660 (citing United States v. ______________
Warren, 612 F.2d 887 (5th Cir. 1980)). On the other hand, ______
Ratzlaf cites to a number of other cases requiring less than _______
actual knowledge. See, e.g., id. (citing cases demonstrating ___ ____ ___
the use of reasonable inferences to find knowledge).
Moreover, we find a generally favorable reference
to Aversa as the only case opposed to a no-knowledge ______
requirement -- and, while a footnote quoted our "reckless
disregard" standard along with "knowledge," there was no
adverse comment or caveat. See id. We do not ascribe to the ___ ___
majority's failure to take up the gauntlet on the dissent's
thrust on Aversa as deliberate decision making. ______
But beyond comments in the Court's opinion, we are
mindful of the wider scope given definitions of "knowledge"
in cases and statutes. For example, the cases applying 18
U.S.C. 656 (bank officer who "willfully misapplies" bank
funds) have generally held reckless disregard to establish
the requisite intent to defraud.1 These holdings come close
____________________
1. We have so held in United States v. Cyr, 712 F.2d 729, ______________ ___
732 (1st Cir. 1983), and in United States v. Fusaro, 708 F.2d _____________ ______
17, 21 (1st Cir. 1983). Other circuits equate intent to
injure the bank with reckless disregard of the bank's
interest. See, e.g., United States v. Hoffman, 918 F.2d 44, _________ _____________ _______
-38- 38
to equating, if not precisely doing so, knowledge and
reckless disregard. We can make the same comment about the
Supreme Court precedents equating the two concepts in various
federal statutes. See McLaughlin v. Richland Shoe Co., 486 ___ __________ _________________
U.S. 128, 133 (1988) ("willfulness" under Fair Labor
Standards Act means defendant "either knew or showed reckless
disregard for the matter of whether its conduct was
prohibited by the statute"); Transworld Airlines v. Thurston, ___________________ ________
469 U.S. 111, 126 (1985) ("willfulness" under Age
Discrimination in Employment Act; same definition applied);
United States v. Murdock, 290 U.S. 389, 395 (1933) ______________ _______
("willfulness" under the Revenue Acts of 1926 and 1928, which
prohibited a "willful" failure to pay a particular tax,
included "careless disregard [for] whether or not one has a
right so to act.")
In the context of the False Statements Act, 18
U.S.C. 1001, a false statement is made knowingly if
defendant demonstrated a reckless disregard of the truth,
with a conscious purpose to avoid learning the truth. United ______
States v. White, 765 F.2d 1469, 1482 (11th Cir. 1985); United ______ _____ ______
States v. Evans, 559 F.2d 244, 246 (5th Cir. 1977). A ______ _____
statutory equating of knowledge and reckless disregard is
found in the definitions contained in the False Claims Act,
____________________
46 (6th Cir. 1990); United States v. Hansen, 701 F.2d 1215, _____________ ______
1218 (7th Cir. 1983); United States v. Thomas, 610 F.2d 1166, _____________ ______
1174 (3d Cir. 1979).
-39- 39
31 U.S.C. 3729, which prohibits "knowingly" presenting a
false or fraudulent claim to the United States Government.
The definitions of "knowing" and "knowingly" apply to a
person who, with respect to information, "acts in reckless
disregard of the truth or falsity of the information, and no
proof of specific intent to defraud is required." 31 U.S.C.
3729(b)(3).
There are also state cases involving fraud actions
where knowledge of falsity is equated with "utter disregard
and recklessness." Singh v. Singh, 611 N.E.2d 347, 350 (Ohio _____ _____
App. 1992); see also James v. Goldberg, 261 A.2d 753, 758 ___ ____ _____ ________
(Md. 1970)("reckless indifference" can impute knowledge).
Beyond these instances of the elastic boundaries of
"knowledge," we are sensible of the practical problems of
drawing too fine a line. We have accepted the fact that a
jury "could infer knowledge if a defendant consciously
avoided learning about the reporting requirements." United ______
States v. Bank of New England, N.A., 821 F.2d 844, 855 (1st ______ __________________________
Cir. 1987) also cited with approval in Ratzlaf, 114 S.Ct. at ____ _____ ____ ________ __ _______
663 n.19. But reckless disregard also, as the instructions
in this case stated, "involves the conscious disregard of a
substantial risk." To this the court below added that the
jury "may consider the frequency with which the defendant was
involved in transactions which might be reportable . . . ."
When we carefully scrutinize these instructions and note that
-40- 40
not merely the concept of recklessness is involved, but
reckless disregard, we must acknowledge that the instructions
require some kind of an awareness of law which is not
casually or negligently but recklessly disregarded.
So, while we sympathize with those who would
interpret Ratzlaf as requiring actual knowledge, we do not _______
see such a clear signal as would cause us to pronounce the
demise of Aversa. We hold that the district court's ______
instruction was a correct application of Aversa, and not ______
error under Ratzlaf. _______
We, therefore, affirm London's convictions for failing to
file CTRs.
D. Sufficiency of the Evidence as to the Money Laundering D. Sufficiency of the Evidence as to the Money Laundering _____________________________________________________________
and and ___
RICO Counts RICO Counts ___________
London asserts that there was insufficient evidence
to support his money laundering and RICO convictions. His
sufficiency arguments are threefold: (1) there was
insufficient evidence that he laundered money with the intent
to promote illegal gambling; (2) there was insufficient
evidence that the enterprise alleged in the indictment was
cognizable under RICO; and (3) there was insufficient
evidence of a nexus between the RICO enterprise and the
racketeering acts involving extortion and the collection of
illegal debts. Our review of the record persuades us that a
rational jury drawing reasonable inferences could have made
-41- 41
the challenged findings beyond a reasonable doubt. See, ___
e.g., United States v. Tuesta-Toro, 29 F.3d 771, 776 (1st ____ _____________ ___________
Cir. 1994) (setting forth standard of review for sufficiency
challenges), cert. denied, 115 S. Ct. 947 (1995). _____ ______
1. Money Laundering 1. Money Laundering ____________________
The money laundering statute under which London was
convicted subjects to criminal sanctions "[w]ho[m]ever,
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 specified unlawful
activity . . . with the intent to promote the carrying on of ____ ___ ______ __ _______ ___ ________ __ __
[the] specified unlawful activity." 18 U.S.C. 1956(a) ___ _________ ________ ________
(1)(A)(i) (emphasis added). Seizing upon the highlighted
language, London contends that there was insufficient
evidence that he conducted his check-cashing business with an
intent to promote the unspecified unlawful activity at issue
-- i.e., illegal gambling. We disagree.
There was overwhelming evidence that London failed
to file CTRs prior to the December 17, 1986, execution of the
search warrant at Heller's, and that London was aware of the
reporting requirements during the period in which he failed
to file CTRs. There also was evidence that London's
unorthodox operating procedures benefitted his bookmaker
customers. Finally, there was evidence that London made
-42- 42
money with every check he cashed. Thus, there was evidence
that London knowingly operated his business in an unorthodox
manner that benefitted both his bookmaker customers and
(derivatively) himself. In our view, this evidence of mutual
interest is more than sufficient to sustain an inference that
London operated his check-cashing business with the intent to
promote the illegal gambling businesses operated by certain
of his customers.
We therefore reject London's argument that there
was insufficient evidence to support his money laundering
convictions.
2. The Enterprise 2. The Enterprise __________________
The RICO statute prohibits one "employed by or
associated with" a statutorily-defined "enterprise" from
conducting the enterprise's affairs "through a pattern of
racketeering activity or collection of unlawful debt." 18
U.S.C. 1962(c). The enterprise alleged in the indictment
was an association between London's Cafe, Inc., d/b/a/
Heller's -- a corporation -- and M & L -- a sole
proprietorship. London questions whether there was
sufficient evidence to sustain a finding that the alleged
enterprise was cognizable under RICO, arguing that (1) a RICO
enterprise cannot be an association of legal entities; (2)
the enterprise did not have a "common or shared purpose which
animates those associated with it" and did not "function as a
-43- 43
continuing unit" with an "ascertainable structure distinct
from that inherent in the conduct of a pattern of
racketeering activity," see United States v. Bledsoe, 674 ___ ______________ _______
F.2d 647, 665 (8th Cir.) (internal quotation marks omitted),
cert. denied, 459 U.S. 1040 (1982); and (3) the enterprise _____ ______
was not distinct from London himself. We do not find these
arguments convincing.
London's first argument is legal. The RICO statute
states that the term "`enterprise' includes any individual,
partnership, corporation, association, or other legal entity,
and any union or group of individuals associated in fact
although not a legal entity." 18 U.S.C. 1961(4). London
contends that, under a plain reading of this provision, an
association-in-fact RICO enterprise such as the one alleged
here must be an association of individuals, and cannot ___________
include legal entities.
London's argument has been addressed to a number of
circuit courts, and each has rejected it. See, e.g., United ___ ____ ______
States v. Console, 13 F.3d 641, 652 (3d Cir. 1993), cert. ______ _______ _____
denied, 114 S. Ct. 1660 (1994); United States v. Blinder, 10 ______ _____________ _______
F.3d 1468, 1473 (9th Cir. 1993); Atlas Pile Driving Co. v. _______________________
DiCon Fin. Co., 886 F.2d 986, 995 n.7 (8th Cir. 1989); United ______________ ______
States v. Perholtz, 842 F.2d 343, 352-53 (D.C. Cir.), cert. ______ ________ _____
denied, 488 U.S. 821 (1988). And we recently indicated, ______
without explicitly considering the issue, that an association
-44- 44
between two legal entities and two individuals can constitute
a RICO enterprise. See Libertad v. Welch, 53 F.3d 428, 444 ___ ________ _____
(1st Cir. 1995). Today we make explicit what we implied in
Libertad: two or more legal entities can form or be part of ________ ___
an association-in-fact RICO enterprise. We think the
Perholtz panel explained why rather well: ________
[RICO] defines "enterprise" as including _________
the various entities specified; the list
of entities is not meant to be
exhaustive. "There is no restriction
upon the associations embraced by the
definition . . . ." United States v. _____________
Turkette, 452 U.S. 576, 580 (1981). On ________
the contrary, Congress has instructed us
to construe RICO "liberally . . . to
effectuate its remedial purposes." Pub.
L. 91-452, 904(a), 84 Stat. 922, 947
(1970) (reprinted in note following 18 _________ __ ____ _________
U.S.C. 1961), quoted in Turkette, 452 ______ __ ________
U.S. at 587; accord Sedima, S.P.R.L. v. ______ _________________
Imrex Co., 473 U.S. 479, 497-98 (1985). __________
[The] restrictive interpretation of the
definition of enterprise would contravene
this principle of statutory construction.
[The restrictive] reading of section
1961(4) [also] would lead to the bizarre
result that only criminals who failed to
form corporate shells to aid their
illicit schemes could be reached by RICO.
The interpretation hardly accords with
Congress' remedial purposes: to design
RICO as a weapon against the
sophisticated racketeer as well as (and
perhaps more than) the artless.
842 F.2d at 343.
We therefore reject London's argument that an
association-in-fact RICO enterprise cannot be comprised of
legal entities.
-45- 45
London's second argument presumes that this circuit
has adopted the test established in Bledsoe, 674 F.2d at 665, _______
and set forth above. See supra at 40-41. We have not and do ___ _____
not do so today, because even if we assume arguendo the ________
test's applicability, there was ample evidence for the jury
to have found that its requirements were met.
The jury could have found that there was a common
or shared purpose animating both the enterprise and London:
doing commerce with (and thereby profiting from) bookmakers
engaged in illegal gambling. The evidence that London as an
individual pursued such a scheme is overwhelming and does not
need repeating. Moreover, M & L and Heller's were the
principal means by which London effectuated his plan. The
jury reasonably found that London used M & L to launder (for
a profit) the proceeds of illegal gambling for his bookmaker
customers, and could have found that he used the privacy
afforded by Heller's to shield M & L from close scrutiny, to
arrange meetings between Ferrara and his bookmaker customers,
and to collect "rent" for Ferrara.
The jury also could have found that the enterprise
functioned as a continuing unit and had an ascertainable
structure distinct from that inherent in the conduct of a
pattern of racketeering activity. As to the latter of these
two requirements, M & L and Heller's were legitimate entities
that did a significant amount of business completely separate
-46- 46
from the pattern of racketeering activity at issue in this
case. Heller's was a bar where drinks and food were sold.
M & L was a check-cashing business -- located inside of
Heller's and operated by the same individual who ran Heller's
-- that cashed checks for customers willing to pay it a
commission. As to the former requirement, the jury could
reasonably have surmised that M & L and Heller's operated as
a symbiotic unit (M & L providing a ready source of cash for
Heller's customers; Heller's customers taking advantage of
M & L's convenience), and that they existed for a common
purpose: the economic gain of London.
We therefore reject London's argument that the
Bledsoe standard has not been met in this case. _______
London's third argument derives from the fact that
"[w]e have consistently interpreted [RICO's] requirement that
a culpable person be `employed by or associated with' the
RICO enterprise as meaning that the same entity cannot do
double duty as both the RICO defendant and the RICO
enterprise." Miranda v. Ponce Fed. Bank, 948 F.2d 41, 44 _______ ________________
(1st Cir. 1991) (quoting 18 U.S.C. 1962(c)). He contends
that he, the defendant named in the indictment, is legally
indistinguishable from M & L and Heller's.
His argument overlooks the fact that M & L, though
a sole proprietorship, had at least one employee other than
-47- 47
himself, and the fact that Heller's was incorporated and had
several employees other than himself. No more is required to
establish the separateness required by RICO. As Judge Posner
explained in responding to a similar argument:
If the one-man band incorporates, it gets
some legal protections from the corporate
form, such as limited liability; and it
is just this sort of legal shield for
illegal activity that RICO tries to
pierce. A one-man band that does not
incorporate, that merely operates as a
proprietorship, gains no legal
protections from the form in which it has
chosen to do business; the man and the
proprietorship really are the same entity
in law and fact. But if the man has
employees or associates, the enterprise
is distinct from him, and it then makes
no difference, so far as we can see, what
legal form the enterprise takes. The
only important thing is that it be either
formally (as when there is incorporation)
or practically (as when there are people
besides the proprietor working in the
organization) separable from the
individual.
McCullough v. Suter, 757 F.2d 142, 144 (7th Cir. 1985). __________ _____
We therefore reject London's argument that he and
the RICO enterprise alleged in the indictment are legally
indistinguishable.
-48- 48
3. Nexus between Enterprise and Racketeering Acts 3. Nexus between Enterprise and Racketeering Acts __________________________________________________
Involving Extortion and the Collection of Illegal Involving Extortion and the Collection of Illegal ___________________________________________________
Debt Debt ____
London's final argument is that there was no nexus
between the enterprise and the racketeering acts involving
extortion and the collection of illegal debt, and that we
therefore must set his RICO convictions aside. We need not
and do not reach this argument. As we have pointed out,
London's RICO convictions are sustainable so long as we can
tell with certainty that the jury found that he committed two
sufficient predicate acts. See supra at 39 (quoting Angiulo, ___ _____ _______
897 F.2d at 1198). Here, the jury sustainably found that
London committed numerous predicate acts of money laundering.
Thus, even if there were no nexus between the enterprise and
the racketeering acts involving extortion and the collection
of illegal debt (an issue on which we express no opinion), we
would sustain London's RICO convictions.
III. III. ____
For the reasons stated, the judgment of the
district court is affirmed. affirmed ________
-49- 49
United States v. London, (1st Cir. 1995).
United States v. London (United States v. London) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.
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§ 2516
18 U.S.C. § 2516