United States v. Chao Fan Xu
706 F.3d 965
| 9th Cir. | 2013Background
- Four Chinese nationals were convicted in Nevada federal court for a scheme to steal Bank of China funds and move proceeds via a Hong Kong conduit, Ever Joint.
- Defendants engaged in foreign exchange fraud, off‑books loans, and false loans to conceal losses, financing real estate, gambling trips, and other expenditures.
- Each defendant entered into fraudulent marriages with U.S. immigration status to facilitate residency and escape enforcement.
- Defendants fled to the United States using falsified documents; trial occurred in the District of Nevada after extensive discovery and videotaped depositions from witnesses in China.
- Convictions: count one RICO conspiracy, counts two and three money laundering and transport of stolen money conspiracies, and related immigration‑ and passport‑fraud counts; sentences were vacated and remanded for resentencing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Extrateritorial reach of RICO | RICO applies to multinational scheme with U.S. elements. | RICO cannot reach conduct abroad when the enterprise is foreign. | RICO can apply to pattern of racketeering when part executed in U.S.; focus on pattern supports extraterritorial application. |
| Sufficiency of evidence for counts two and three | Evidence showed conspiratorial agreement to transfer funds tied to Bank of China fraud into Ever Joint and U.S. transactions. | Proceeds could not be traced directly to the Bank of China fraud; conspiracy requires less than full completion of underlying offenses. | convictions for money laundering conspiracy and conspiracy to transport stolen money affirmed; tracing not required for conspiracy. |
| Sentencing method and ex post facto | Guidelines in effect at sentencing should apply based on the conspiracies extending into 2004. | Two groups (bank fraud vs immigration fraud) and later conduct should not trigger higher base levels; ex post facto concerns arise from using amended guidelines. | District court erred by applying § 2S1.1(a)(1); remanded for resentencing under § 2S1.1(a)(2); ex post facto concerns resolved on remand. |
| Restitution adequacy and basis | Restitution reflects losses caused by the scheme; Bank of China loss supports $482 million. | Record insufficient to justify stated loss amount; need explicit factual basis and calculation. | Remand for reconsideration of the restitution amount and basis; need clearer factual findings. |
Key Cases Cited
- Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (2010) (focus on focus of statute and extraterritorial reach)
- Agency Holding Corp. v. Malley-Duff Assocs., 483 U.S. 143 (1987) (heart of RICO is pattern of racketeering)
- Lazarenko, 564 F.3d 1026 (9th Cir. 2009) (distinguishes tracing requirements for conspiracy vs. substantive offenses)
- Grunewald v. United States, 353 U.S. 391 (1957) (conspiracy duration and concealment acts context)
- Azeem, 946 F.2d 13 (2d Cir. 1991) (foreign crimes in base offense level considerations cautioned)