UNITED STATES OF AMERICA, Plaintiff-Appellee, v. RORY BARTLEY, a/k/a Roy Bailey, Defendant-Appellant.
No. 98-4317
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
Decided: October 26, 2000
PUBLISHED. Argued: June 5, 2000. Appeal from the United States District Court for the Southern District of West Virginia, at Charleston. Charles H. Haden II, Chief District Judge. (CR-97-157). Before WILKINSON, Chief Judge, and MICHAEL and MOTZ, Circuit Judges.
COUNSEL
ARGUED: Kevin B. Burgess, HAMILTON, BURGESS, YOUNG & POLLARD, P.L.L.C., Oak Hill, West Virginia, for Appellant. Louise Anna Crawford, OFFICE OF THE UNITED STATES ATTORNEY, Charleston, West Virginia, for Appellee. ON BRIEF: Rebecca A.
OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
Rory Bartley pled guilty to one count of conspiracy to distribute marijuana and one count of conspiracy to launder money. On appeal, Bartley challenges only his sentence. Because the district court erred in refusing to group Bartley‘s offenses, but did not err in finding Bartley‘s managerial role in the conspiracy justified an enhancement, we affirm in part, reverse in part, and vacate and remand for resentencing.
I.
Edwin Bruce recruited Bartley to participate in a marijuana distribution network based in Charleston, West Virginia. Bruce introduced Bartley to a number of interested buyers, including street dealers. Bartley regularly distributed marijuana to these dealers from Bruce‘s supply and made wire transfers to California to purchase marijuana on Bruce‘s behalf.
Bartley eventually disaffiliated from Bruce and located another marijuana supplier, but he maintained his associations with some of Bruce‘s street dealers and at times obtained marijuana from Bruce‘s distributors. Ultimately, Bartley expanded his drug distribution activities to Parkersburg, West Virginia, and directed one of his street dealers to identify addresses there to which marijuana could be mailed.
Bartley‘s street dealers would distribute the marijuana and wire transfer the proceeds on Bartley‘s instruction, often to his uncle Claudius Pryce in New York. Bartley himself would also wire funds from his drug proceeds to various family members.
Bartley was charged with conspiracy to distribute marijuana, distribution of marijuana, conspiracy to launder money, and two counts of
The district court did not group the two conspiracy counts together into a single “Group” under Part D of Chapter 3 of the Sentencing Guidelines. Instead, the court treated the two counts as distinct, and, in accordance with
On appeal, Bartley contends that the district court erred in failing to group the two conspiracies for sentencing purposes. He also contends that the government offered insufficient evidence to support the district court‘s imposition of the enhancements for his alleged role in the conspiracies. We review a district court‘s legal interpretation of the Sentencing Guidelines de novo, see United States v. Williams, 152 F.3d 294, 302 (4th Cir. 1998), and its underlying factual determinations in applying the Guidelines for clear error. See
Bartley first argues that the two conspiracy counts should have been grouped in calculating his combined adjusted offense level. Section 3D1.2 of the Sentencing Guidelines provides for the grouping of closely related counts, or those that “involv[e] substantially the same harm.” The Guidelines identify four situations in which counts should be grouped together for sentencing purposes:
(a) When counts involve the same victim and the same act or transaction.
(b) When counts involve the same victim and two or more acts or transactions connected by a common criminal objective or constituting part of a common scheme or plan.
(c) When one of the counts embodies conduct that is treated as a specific offense characteristic in, or other adjustment to, the guideline applicable to another of the counts.
(d) When the offense level is determined largely on the basis of the total amount of harm or loss, the quantity of a substance involved, or some other measure of aggregate harm, or if the offense behavior is ongoing or continuous in nature and the offense guideline is written to cover such behavior.
In an addendum to Bartley‘s Presentence Report (PSR), the probation officer cited subsection (b) and application note 2 to explain why he treated the two conspiracy counts as separate groups. In the officer‘s opinion, the conspiracies harmed distinct societal interests and therefore did not involve “the same victim.” Bartley objected to the PSR. Although the government agreed with the probation officer‘s analysis of subsection (b), it also brought to the district court‘s attention the potential relevance of subsection (c) as a basis for treating the
For purposes of this appeal, we assume, without deciding, that the conspiracies impact different societal interests, and so grouping the counts under subsection (b) would be improper. See United States v. Harper, 972 F.2d 321, 322 (11th Cir. 1992) (refusing to group under subsection (b)); United States v. Gallo, 927 F.2d 815, 824 (5th Cir. 1991) (same). But see United States v. Lopez, 104 F.3d 1149, 1150-51 (9th Cir. 1997) (grouping under subsection (b) proper); United States Sentencing Commission, Most Frequently Asked Questions About the Sentencing Guidelines, 20-21 (7th ed. 1994) (“Most Frequently Asked Questions“) (grouping under subsections (a), (b), or (c) proper).1 The commentary to
To prevent “double counting,” subsection (c) requires offenses to be grouped when one count “embodies conduct that is treated as a specific offense characteristic in, or other adjustment to,” the offense level calculation of the other count.
Rice‘s drug offenses were counted twice toward his sentence; once as the basis for his conviction on his drug counts, and again as a specific offense characteristic of the money laundering count. This had the effect of increasing Rice‘s money laundering offense level by three pursuant to
§ 2S1.1(b) because he knew or believed the funds he was receiving were the proceed[s] of the unlawful distribution of marijuana. . . . Therefore, we find that Rice‘s offense behavior was impermissibly double counted. Accordingly, we hold that the district court erred in failing to group Rice‘s counts for sentencing purposes as required by subsection (c).
United States v. Rice, 185 F.3d 326, 329 (5th Cir. 1999).
In reaching this holding the Fifth Circuit relied on its earlier decision in United States v. Haltom, 113 F.3d 43, 46 (5th Cir. 1997), which involved one count of mail fraud and four counts of tax evasion. The Haltom court held that subsection (c) required the counts to be grouped where the district court applied a two-level enhancement under
Bartley, like Rice, received the three-level enhancement under
are closely related.”
Nevertheless, the government and the dissent maintain that subsection (c) does not apply to Bartley‘s case because the specific offense characteristic at issue does not punish for the actual distribution or transport of drugs, but rather for the knowledge that the laundered funds were drug proceeds. According to the government and the dissent, this knowledge is a separate act of criminal conduct not mirrored in the drug conspiracy count. To adopt this argument would promote an approach to the Sentencing Guidelines that would require district courts to unnecessarily “split hairs” or guess congressional intent in evaluating which specific offense characteristics or other adjustments are covered by subsection (c). Moreover, if we followed this approach, we could never group a money laundering offense with a drug offense. But see Most Frequently Asked Questions, supra, 21 (“§ 3D1.2 would call for grouping of related drug trafficking and money laundering counts under one or more of rules (a), (b), or (c).“).
Furthermore, whatever the merit of this approach in a given case — and our good friend Judge Wilkinson in dissent makes about as good a case for this approach as possible — we cannot conclude it should be followed here. Subsection (c), after all, requires a court, when determining whether to group offenses, to consider the conduct embodied in each of a defendant‘s multiple counts. In this case, the
The dissent contends that because “the guidelines use the words ‘counts’ and ‘offenses’ interchangeably,” post at 17, the Guidelines intend a court to confine its grouping analysis to the legal elements of an “offense” rather than the conduct charged in the indictment. Examination of the terms “count” and “offense” as used throughout the Guidelines, however, leads inevitably to the contrary conclusion that those terms encompass more than the elements of a crime. Indeed, Chapter Two of the Guidelines repeatedly uses the term “offense characteristics,” and a review of what the Commission considers “characteristics” of an “offense” makes clear that “offense” includes aspects of a crime other than its elements. For example, the Commission states that whether a defendant “knew” the source of laundered funds is a “characteristic” of the “offense” of money laundering.
Nor does our holding that a court, when grouping, must examine
This case thus significantly differs from United States v. Lombardi, 5 F.3d 568 (1st Cir. 1993), on which the dissent heavily relies. Lombardi involved no conspiracy counts but charges of mail fraud and money laundering that were separable; Lombardi fraudulently secured insurance proceeds and then deposited the proceeds in a bank. There is no indication that Lombardi‘s deposits in any way facilitated ongoing or future mail fraud, or that the indictment specifically charged that they did. The rationale of Lombardi simply does not apply here.4
Although there may be conceptual difficulty in some cases in characterizing “knowledge” that the laundered funds were drug proceeds as “conduct” embodied in a count charging drug violations, there is none here. Unlike Lombardi, in this case the indictment quite clearly charges a drug conspiracy that includes use of drug proceeds in money laundering to facilitate illegal drug distribution. Therefore, after the district court enhanced Bartley‘s money laundering sentence because of his knowledge that laundered funds were proceeds of a drug conspiracy, the court should have grouped the two conspiracy counts.
The Sentencing Commission has explained that the Guidelines provisions governing the grouping of multiple counts are intended to enhance a defendant‘s sentence only if the multiple counts “represent additional conduct that is not otherwise accounted for by the guidelines.”
III.
Bartley contends that the district court also erred in finding that he exercised a managerial or supervisory role in the conspiracies, a finding the court used to justify a three-level enhancement in calculating the adjusted offense level for each count. See
The record supports the district court‘s finding that Bartley was a manager or supervisor in each of the conspiracies. The government presented evidence that Bartley controlled the activities of other participants in the drug distribution conspiracy by directing one of his street dealers to identify addresses in Parkersburg, West Virginia, where the packages of marijuana could be sent, and by sending his girlfriend to West Virginia on at least one occasion to transport the drugs. The record also indicates that from the time Bartley became involved in the conspiracy, he “exercised management responsibility” by setting prices and terms of payment, handling proceeds, arranging the logistics of the deliveries, and giving advice to his street dealers on how to market the product. With regard to the money laundering conspiracy, Bartley repeatedly directed others to wire transfer proceeds from the drug distribution activities or to receive such transfers of funds on his behalf.
This is not a case in which a defendant simply supplied drugs and negotiated their sale. Rather, the evidence clearly indicates that Bartley “arrang[ed] the logistics of [marijuana] deliveries or payments,” and at the very least “coordinate[d]” the activities of others. United States v. Vargas, 16 F.3d 155, 160 (7th Cir. 1994). This alone is suffi-
Therefore, the district court did not clearly err in finding that Bartley‘s role in the offenses justified a three-level enhancement under
IV.
For the above reasons, we reverse the district court‘s refusal to group the conspiracy counts, but we affirm the sentencing enhancements imposed for Bartley‘s role in each conspiracy. We vacate the sentence and remand the case to the district court for re-sentencing consistent with this opinion.
AFFIRMED IN PART, REVERSED IN PART, VACATED IN PART, AND REMANDED
WILKINSON, Chief Judge, dissenting:
I respectfully dissent from the grouping of the conspiracy offenses of which Bartley was convicted. There is a square conflict among the circuits regarding whether to group money laundering and narcotics distribution offenses under
I believe that money laundering and drug trafficking are sufficiently different crimes that merit no grouping at all. Because group-
I.
Bartley contends that his money laundering and drug offenses should be grouped under
Subsection (b) mandates grouping “[w]hen counts involve the same victim and two or more acts or transactions [are] connected by a common criminal objective or constitut[e] part of a common scheme or plan.”
The basic problem with grouping under subsection (b) is that the narcotics statutes and the money laundering statute protect separate societal interests. See United States v. Harper, 972 F.2d 321, 322 (11th Cir. 1992) (holding that narcotics distribution increases violence and threatens public health while money laundering threatens the integrity of lawfully operating financial institutions); United States v. Gallo, 927 F.2d 815, 824 (5th Cir. 1991) (same). Quite simply, one may launder money without participating in a narcotics conspiracy, and one may participate in a narcotics conspiracy without laundering money. Each crime is different, and each inflicts distinct harms upon society.
Congress recognized as much when it passed the money laundering statute. See
The societal interests protected by the money laundering statute thus differ from the societal interests protected by the drug laws. See United States v. Heaps, 39 F.3d 479, 486 (4th Cir. 1994) (in creating the money laundering statute, “Congress intended to prevent an ill other than those already prohibited by other laws“). The differences are at least threefold. First, in contrast to the narcotics laws, the money laundering statute is concerned with collecting tax revenue on income from illicit sources. Section 1956 applies to individuals who launder money “with intent to engage in conduct constituting a violation of section 7201 or 7206 of the Internal Revenue Code of 1986.”
Second, the money laundering statute aims to protect the integrity of financial institutions. There is a wholly separate societal interest in protecting the integrity of such institutions given their key role in the country‘s economy. “While both [narcotics distribution and money laundering] taint our polity, the former taints our people; it injures their bodies and their minds. The latter taints our institutions; it uses otherwise legitimate means to transfer or hide illegitimate gains.” United States v. Lopez, 104 F.3d 1149, 1152 (9th Cir. 1997) (Fernandez, J., dissenting). Congress recognized that money laundering placed financial institutions at risk. See S. Rep. No. 99-433, at 2 (“[O]rganized crime today uses banks and other financial institutions as routinely, if not as frequently, as legitimate businesses.“). Bank employees could be enticed to aid criminals in their schemes to launder money. Public confidence in financial institutions could be undermined if it were revealed that they served underworld clients. In order to protect financial institutions, the money laundering statute creates a good faith defense for financial institutions that inform law enforcement officials about customers they suspect of money laundering. See
Finally, and most importantly, the money laundering statute is designed to prevent a variety of criminals, not just drug dealers, from enjoying the profits of their illicit activities. Section 1956‘s prohibitions do not extend solely to the proceeds of narcotics distribution. Rather, section 1956 applies to profits from, among other things, illegal gambling, prostitution, murder-for-hire, loansharking, embezzlement, bribery, and extortion. See
This wide net of section 1956 illuminates the shortcomings of the Ninth Circuit‘s analysis in United States v. Lopez, 104 F.3d 1149 (9th Cir. 1997) (per curiam), upon which Bartley relies. In that case, the Ninth Circuit determined that the societal interests protected by the money laundering statute and the drug trafficking statutes are closely related because money laundering allows drug dealers “to obtain the benefits of income gained from illicit activities.” Lopez, 104 F.3d at 1150-51. Under the Ninth Circuit‘s view, the societal interest protected by the money laundering statute is that of eliminating the drug trade.
Treating narcotics distribution and money laundering as “closely related,” however, misstates the societal interest protected by section 1956 — namely, to protect society from the disbursement of capital earned by criminals. This is why section 1956 applies to so many crimes besides narcotics distribution. The Ninth Circuit‘s analysis would have us group the money laundering and gambling charges for a bookie who launders his proceeds, since money laundering allows bookies “to obtain the benefits of income gained from illicit activities.” Likewise, the Ninth Circuit‘s analysis would have us group the money laundering and murder offenses for a hitman, since money laundering allows assassins “to obtain the benefits of income gained from illicit activities.”
This simply cannot be. The facts of this case illustrate the separate societal interests invaded. First, several of Bartley‘s coconspirators
Because the societal interests protected by the money laundering and narcotics statutes are distinct, the district court properly refused to group Bartley‘s offenses under subsection (b).
II.
The majority contends that Bartley‘s money laundering and drug offenses should be grouped under
I again disagree. Subsection (c) mandates grouping “[w]hen one of the counts embodies conduct that is treated as a specific offense characteristic in, or other adjustment to, the guideline applicable to another of the counts.”
I am persuaded neither by the majority‘s analysis nor by United States v. Rice, 185 F.3d 326 (5th Cir. 1999), upon which the majority relies. Both analyses disregard the text of
In the course of avoiding the clear text of the guidelines, my good colleagues emphasize the language used in Bartley‘s indictment rather than the legal elements of his two offenses. See ante at 8. The majority offers no support from the guidelines or the caselaw for its view that the factual averments of the indictment are dispositive. The guidelines suggest that, if anything, the elements of particular offenses are the critical factor in the
Despite the fact that the First Circuit‘s opinion in Lombardi involved the interplay of money laundering and mail fraud, rather than money laundering and narcotics distribution, that case offers valuable insights on the subsection (c) analysis. The Lombardi court determined that to group the defendant‘s money laundering and mail fraud offenses would create a disturbing anomaly in the guideline‘s application. “One who commits a fraud and launders the money (thereby knowing of its source) is normally more culpable than one who merely launders the money knowing of its source. Yet if Lombardi‘s interpretation were adopted, a defendant would get exactly the same total offense level whether the defendant committed the mail fraud or merely knew that someone else had committed it.” Lombardi, 5 F.3d at 571.
The majority‘s analysis ignores the anomaly the First Circuit identified in Lombardi. If Bartley‘s offenses are grouped, Bartley would
I am also not persuaded by the majority‘s explanation of why Bartley‘s narcotics and money laundering offenses are “closely related.” See
It appears to me that charges for the use of a firearm in a bank robbery and for possession of that same firearm are more closely related than charges for money laundering and drug distribution. As noted above, Congress intended the money laundering statute to constitute a “new Federal offense,” S. Rep. No. 99-433, at 4 (1986), and it designed the statute to target conduct other than that which generated the “dirty” money. See, e.g., United States v. Holmes, 44 F.3d 1150, 1154 (2d Cir. 1995). The money laundering statute applies to proceeds from many different types of illegal activities, not just narcotics offenses. This is the difference between the crimes the guidelines suggest are closely related, and the crimes of which Bartley was convicted. It is nearly impossible to become eligible for prosecution for the use of a firearm in a bank robbery without also becoming eligible for prosecution for possession of a firearm. As a result, grouping these two offenses is appropriate under subsection (c). By contrast, it
The majority argues, however, that Bartley‘s offenses are closely related since Bartley laundered money in order to facilitate additional narcotics purchases. See ante at 10. Neither the guidelines nor the money laundering statute, however, provide any basis for this distinction. The guidelines considered a similar example where a second crime was committed in order to facilitate the first. The guidelines determined that grouping was not appropriate in that case. See
The majority decries the two point increase in Bartley‘s total offense level that results from
III.
That Bartley‘s money laundering offense is loosely related to his narcotics activities is no reason to group his two crimes for sentencing purposes. Congress intended for drug trafficking and money laundering to constitute separate crimes, and the Sentencing Commission intended not to group them. Bartley committed two separate offenses and inflicted two distinct harms upon society. The majority‘s approach consolidates these harms. In doing so, it has underestimated the full extent of personal devastation and institutional corruption that narcotics enterprises cause.
I would affirm the judgment.