Opinion
No. CR 04-0323 VRW.
September 12, 2006
ORDER
Defendants Jimmy Quan and Anna Wong are charged with five counts of money laundering in violation of 18 USC § 1956. Defendants move to dismiss these money laundering charges, counts twenty-four through twenty-eight in the second superceding indictment. For reasons discussed below, defendants' motion is DENIED.
I
The following is a brief summary of the government's theory of the case, as contained within the second superceding indictment, which gives rise to the money laundering counts. Defendants concealed assets of the corporation Tomi LLC from the Bankruptcy Court from February 2001 through August 2005 in violation of 18 USC § 152. In part, this concealment took the form of lending $325,000 to another corporation managed by the defendants, 1081 LeConte LLC, secured by an interest in property at 1081 LeConte Ave. The money was lent on February 2, 2001. This property was then transferred without consideration from 1081 LeConte LLC to Jo Lene Utah, Inc, another corporation under the defendants control, on April 4, 2003. Tomi LLC filed for bankruptcy on July 8, 2003, and filed a fraudulent statement of financial affairs on July 31, 2003 which concealed the interest in 1081 LeConte Ave. Defendants then sold the property interest in 1081 LeConte Ave using Jo Lene Utah, Inc, on August 4, 2003. The proceeds of this sale totaling $272,721 were disbursed from the escrow account established for the sale in the form of five checks made payable to the defendants' children on August 5, 2003. The money laundering charges arise from the transaction which deposited the sale proceeds into bank accounts in the names of the defendants' children.II
Defendants seek to dismiss the money laundering charges because the act of depositing the checks into their children's bank accounts are not distinct from the underlying offense of concealing assets in violation of 18 USC § 152.
In the Ninth Circuit, prosecution for money laundering must involve a transaction in proceeds from a "previous and completed criminal activity." United States v. Savage, 67 F3d 1435, 1441-42 (9th Cir 1995). In the present case, defendants criminal activity was concealing the property interest by filing a fraudulent report during a bankruptcy proceeding on July 31, 2003. The proceeds from this criminal activity consist of the money placed in an escrow account after the sale of the concealed property on August 4, 2003. The act of depositing this money into their children's accounts on August 5, 2003, is distinct from the concealment of assets during the bankruptcy proceedings. The Ninth Circuit language "separate and completed criminal activity" does not preclude liability for a completed act of concealment in an ongoing criminal offense.
Defendants define completed criminal activity in a manner which would prohibit prosecution for money laundering for transactions which involve the proceeds from separate, completed acts in an ongoing criminal scheme. Defendants argue that because the concealment of assets continued until August 2005, the proceeds from concealment could not have been laundered prior to August 2005. Such an interpretation of completed criminal activity would have the court create immunity from money laundering charges for any transaction that predates the completion of an ongoing criminal offense or scheme.
While defendants may have continued to conceal assets from the bankruptcy court after August 5, 2003, the money laundering charges involve a distinct concealment on July 31, 2003. This concealment created proceeds in the form of an undisclosed property interest, and ultimately $272,721 in an escrow account after the sale of the property on August 4, 2003. Transactions seeking to conceal or disguise the nature, location, source, ownership and control of these proceeds can be charged as money laundering pursuant to 18 USC § 1956. The timing of these acts clearly demonstrates that the concealment of assets was separate and complete prior to issuing the five check; the concealment of the property interest on July 31, 2003, was the underlying criminal activity, the sale of the property on August 4, 2003, generated proceeds from the concealment and the disbursement into the five bank accounts on August 5, 2003 were transactions with those proceeds which give rise to money laundering charges.
Prosecuting separate transactions which use proceeds of an ongoing criminal violation will not frustrate the congressional intent that money laundering "be a separate crime distinct from the underlying offense that generated the money to be laundered."United States v. Edgmon, 952 F2d 1206, 1213 (10th Cir 1991), quoted by Savage, 67 F3d at 1442. In this case, depositing the illegal proceeds from a completed act of concealment is distinct from the ongoing violation of 18 USC § 152 in concealing corporate assets.
Defendants' motion to dismiss is DENIED.
IT IS SO ORDERED.