UNITED STATES, Appellee, v. Michael B. LONDON, Defendant, Appellant.
No. 93-1898.
United States Court of Appeals, First Circuit.
Heard May 4, 1995. Decided Sept. 18, 1995.
Order Denying Rehearing and Suggestion for Rehearing En Banc Oct. 20, 1995.
66 F.3d 1227
Nina S. Goodman, Attorney, with whom, David S. Kris, Attorney, Department of Justice, Criminal Division, Appellate Section, Washington, DC, Donald K. Stern, United
Before CYR, Circuit Judge, COFFIN, Senior Circuit Judge, and BOWNES, Senior Circuit Judge.
BOWNES, Senior Circuit Judge.
After a trial that 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.
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 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 1231 — London never filed a CTR notifying the Internal Revenue Service (IRS) of his many currency transactions involving more than $10,000. See
London‘s operating procedures were a boon to his bookmaker customers. Not only did London provide these 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
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
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 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.
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,
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 Au-
Trial commenced on January 4, 1993, and concluded on February 19, 1993, when the jury returned guilty verdicts 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.
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 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,
1. Internal Authorization under 18 U.S.C. § 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.
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,
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 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 1088-85, 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 inSection 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 Money Laundering
Title III specifies the offenses for which an interception order may issue.
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
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
3. Interception and Disclosure of Extortion-Related 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 interception order. See generally
Unlike London‘s first two arguments, the instant one is not built upon a faulty factual basis; extortion in violation of
Here, the intercepted rent conversations clearly related to at least one offense — operating a gambling business in violation of
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, 510 U.S. 1041 (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
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 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 ... conclusion 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 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.
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.
In assessing whether the government‘s minimization efforts pass muster under
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
London characterizes as insufficient the court‘s targeted individual must be on the premises limitation by 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.
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
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.
We therefore reject London‘s minimization arguments.
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.
The first and third of London‘s claims are difficult to fathom, as the affidavit attached to the 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 1236 (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 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
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 During 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
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.
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.
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
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
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, 63 F.3d 1, 14 (1st Cir. 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 14 (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 16. The reckless disregard standard therefore played no role in the Saccoccia court‘s holding. We therefore feel that the question whether Ratzlaf has implicitly 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 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
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 was all that was needed to establish willfulness under
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.
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.
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 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
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.
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. 510 U.S. at 137 n. 1 (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
In the context of the False Statements Act,
There are also state cases involving fraud actions where knowledge of falsity is equated with utter disregard and recklessness. Singh v. Singh, 81 Ohio App.3d 376, 611 N.E.2d 347, 350 (1992); see also James v. Goldberg, 256 Md. 520, 261 A.2d 753, 758 (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, 510 U.S. at 149 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 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 and 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 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, 513 U.S. 1132 (1995).
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.
There was overwhelming evidence that London failed to file CTRs prior to the De-
We therefore reject London‘s argument that there was insufficient evidence to support his money laundering convictions.
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.
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.
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, 511 U.S. 1076 (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 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 following18 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.
We therefore reject London‘s argument that an association-in-fact RICO enterprise cannot be comprised of legal entities.
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 1242-1243. 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 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
His argument overlooks the fact that M & L, though a sole proprietorship, had at least one employee other than 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 im-
portant 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.
3. Nexus between Enterprise and Racketeering Acts Involving Extortion and the Collection of Illegal 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 1242 (quoting Angiulo, 847 F.2d at 968). 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.
For the reasons stated, the judgment of the district court is affirmed.
Before TORRUELLA, Chief Judge, COFFIN and BOWNES, Senior Circuit Judges, SELYA, CYR, BOUDIN, STAHL and LYNCH, Circuit Judges.
ORDER OF COURT
The panel of judges that rendered the decision in this case having voted to deny the petition for rehearing submitted by the appellant and the suggestion for the holding of a rehearing en banc having been carefully considered by the judges of the court in regular active service and a majority of said judges not having voted to order that the appeal be heard or reheard by the court en banc.
It is ordered that a petition for rehearing and a suggestion for rehearing en banc be denied.
UNITED STATES, Appellee, v. Michael B. LONDON, Defendant, Appellant.
TORRUELLA, Chief Judge (dissenting).
I believe the panel opinion in this case is contrary to the Supreme Court‘s decision in Ratzlaf v. United States, 510 U.S. 135 (1994). I reach this conclusion for primarily two reasons.
First, Ratzlaf held that in order to sustain a conviction for structuring under
Because I believe the panel opinion misinterprets settled law, I dissent from the denial of the petition for rehearing or rehearing en banc.