United States District Court, S.D. Georgia, Augusta Division
MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION
BRIAN K. EPPS, Magistrate Judge.
The Indictment alleges Defendant committed wire fraud by converting to personal use revenues from government contracts he owed to business partners who performed the substantive contract work, and by converting investments for which Defendant had promised repayment and exorbitant returns. The Indictment does not charge Defendant with wire fraud, but instead uses the wire fraud allegations as a predicate for three counts of promotional money laundering in violation of 18 U.S.C. § 1956. Defendant moves to dismiss the Indictment, arguing it alleges no more than wire fraud. After considering all briefs and oral arguments on February 10, 2014, the Court REPORTS and RECOMMENDS that Defendant's motion to dismiss be DENIED.
I. THE INDICTMENT ALLEGATIONS
Taking all allegations of the Indictment as true, as one must for purposes of the present motion, the facts are as follows. Defendant established Benchris and Associates, Incorporated ("Benchris"), to procure state and federal contracts for construction projects and supplies. (Doc. no. 1 ("Indictment"), ¶ 1.) Benchris obtained certification as a contractor from the United States Small Business Administration 8(a) Business Development Program, which assists small businesses owned and controlled by people who are socially and economically disadvantaged. (Id. ¶ 2.) Certification in this program "allows 8(a) businesses to form joint ventures and teams to bid on government contracts, enhancing the ability of such business[es] to perform larger prime contracts and overcome the effects of contract bundling (i.e. the combining of two or more contracts together into one large contract)." (Id.) During the period of 2000 to 2011, Defendant engaged in two, distinct forms of fraudulent activity as an officer of Benchris that allowed him to wrongfully convert $1.2 million to his personal use. (Id. ¶¶ 4, 14.)
The first scheme involved larger companies with whom Benchris partnered to work on government contracts. The agreement was that Benchris would bid on government contracts as an 8(a) contractor, the larger partner company would perform the substantive contract work, and Benchris would accept the government payment and transmit the bulk of it to the larger partner, retaining for Benchris only a nominal fee for its involvement. (Id. ¶¶ 6-9.) Benchris entered into such an arrangement with Lifecycle Construction Services ("Lifecycle") headquartered in Fredericksburg, Virginia, with respect to a government demolition contract obligating the government to pay a total of $135, 501.01. (Id. ¶ 7.) Lifecycle and Benchris agreed that Lifecycle would perform the demolition and receive $126, 000, with Benchris receiving the remainder. (Id. ¶ 9.) As part of the scheme to defraud, Defendant only made a partial payment of $50, 000 to Lifecycle and never paid the remaining balance to Lifecycle of $76, 000. (Id. ¶ 10.)
The second scheme involved the conversion of investor funds. Defendant induced individuals to make investments in Benchris by promising them repayment in full along with a return on investment of fifteen to twenty percent from profits earned on government contracts. (Id. ¶ 11.) Instead, Defendant utilized the investments to pay the larger partner companies for their share of contract payments. (Id. ¶ 13.) In addition, Defendant repaid investors with contract funds that Benchris owed to larger partner companies. (Id. ¶ 12.)
After describing these wire fraud schemes, the Indictment sets forth the three counts of promotional money laundering, alleging that Defendant used the proceeds of his wire fraud schemes to engage in additional financial transactions for the purpose of promoting the carrying on of his wire fraud schemes. (Id. ¶ 15.) Each count relates to a specific financial transaction alleged to be promotional in nature, set forth in the Indictment in the following table:
Count Date Financial Transaction the delivery of a cashier's check(# 61190) 1 April 19, 2011 from SRP Federal Credit Union to a person whose initials are R.L., made payable to R.L. in the amount of $8500 the delivery of a check (#1022) to R.W. 2 November 19, 2009 Allen, LLC, made payable to R.W. Allen in the amount of $15, 087.50 drawn on an account in the name of BENCHRIS and Associates, at Queensborough National Bank and Trust the delivery of a check (#1015) to a 3 November 5, 2009 person whose initials are J.C.S. made payable to J.C.S. in the amount of $31, 134.38 drawn on an account in the name of BENCHRIS and Associates, at Queensborough National Bank and Trust check
II. THE MOTION TO DISMISS
Defendant advances two arguments for dismissal. First, Defendant argues that Count One fails to allege the offense of promotional money laundering because the specified financial transaction has no relationship to the purported wire fraud scheme and, instead, merely concerns Defendant's refund of money to a friend for whom he was unable to purchase tickets to a sporting event. As detailed below, the argument is improper because it misconstrues the Indictment and relies on discovery documents to prove the nature of the transaction. Second, Defendant argues that the Court should dismiss all three promotional money laundering counts because they arise out of the same conduct that forms the basis of the predicate wire fraud allegations. Defendant argues that, when the same conduct constitutes wire fraud and promotional money laundering, the offenses "merge into the same crime, and the government cannot charge promotional money laundering... simply in an effort to garner a more severe sentence." (Doc. no. 23 ("Def's Mot. to Dismiss"), p. 8.) The second argument fails because, as explained below, it is based on the mistaken belief that, when the same conduct violates two criminal laws, a defendant can only be charged with and convicted of the lesser offense.
III. COUNT ONE OF THE INDICTMENT SATISFIES ALL ELEMENTS OF PROMOTIONAL MONEY LAUNDERING.
Before explaining why Count One sufficiently alleges promotional money laundering, it is best to begin with the liberal pleading standard by which courts determine the sufficiency of indictments, as well as the elements of the promotional money laundering offense. Fed. R. Crim. P. 7(c)(1) requires that an indictment "be a plain, concise, and definite written statement of the essential facts constituting the offense charged...." An indictment that tracks the language of the relevant statute is sufficient, as long as it also provides a statement of facts and circumstances that gives notice of the offense to the accused. See United States v. Jordan, 582 F.3d 1239, 1245 (11th Cir. 2009); see also United States v. Silverman, 745 F.2d 1386, 1392 (11th Cir. 1984) ("The accusation must be legally sufficient, i.e., it must assert facts which in law amount to an offense and which, if proved, would establish prima facie the accused's commission of that offense."). The sufficiency of an indictment is determined from its face and is not a high hurdle. See United States v. Baxter, 579 F.Appx. 703, 705 (11th Cir. 2014).
Pursuant to 18 U.S.C. § 1956, the elements of the promotional money laundering offense charged in the Indictment are as follows: (1) the defendant conducted or attempted to conduct a financial transaction; (2) the defendant knew the property involved in the transaction represented the proceeds of unlawful activity; (3) the property involved was in fact the proceeds of the specified unlawful activity; and (4) the defendant conducted the financial transaction with the intent to promote the carrying on of the specified unlawful activity. United States v. Jennings, 599 F.3d 1241, 1252 (11th Cir. 2010). The Indictment satisfies all four elements as to Count One. The Indictment describes the predicate wire fraud schemes that constitute the underlying unlawful activity in paragraphs one through fourteen. Paragraph fifteen satisfies all remaining elements of the offense by identifying a specific financial transaction occurring on April 19, 2011, alleging this transaction ...