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U.S. v. Paramo

filed: July 7, 1993; As Corrected July 12, 1993.



Before: Cowen, Roth, and Rosenn, Circuit Judges

Author: Cowen


COWEN, Circuit Judge.

Defendant Alberto Paramo ("Paramo") appeals his conviction on five counts of money laundering in violation of 18 U.S.C. §§ 2 and 1956(a)(1)(A)(i). Paramo claims that the evidence was insufficient to support the money laundering convictions, because it failed to establish that he conducted financial transactions with the "intent to promote the carrying on of . . . unlawful activity" under section 1956(a)(1)(A)(i). Paramo also claims that the district court erred by denying him a downward departure for substantial assistance. A court ordinarily may not depart downward for substantial assistance unless the government makes a motion pursuant to Sentencing Guidelines section 5K1.1. However, Paramo argues that the district court had authority to grant him a departure because the government purposefully refused to file a 5K1.1 motion to penalize him for pleading not guilty and exercising his right to trial on the money laundering counts.

We find sufficient evidence of money laundering to support Paramo's conviction. In addition, we hold that absent a motion by the government, the district court has authority to grant a downward departure for substantial assistance if the government's sole motive for withholding a 5K1.1 motion was to penalize the defendant for exercising his constitutional right to a trial. Because the record indicates that the district court might have erroneously believed it lacked such authority, we will vacate Paramo's sentence and remand for resentencing.


A jury convicted Paramo on all thirteen counts of an indictment charging, inter alia, five counts of mail fraud in violation of 18 U.S.C. § 1341 and five counts of money laundering in violation of 18 U.S.C. § 1956(a)(1)(A)(i).*fn1 Paramo's conviction stemmed from his participation in a scheme to embezzle Internal Revenue Service tax refund checks. The scheme was devised by Bonifacio Vega, a business tax examiner for the IRS. On five separate occasions, Vega arranged to have an IRS refund check issued to a fictitious payee and mailed to an address in New York City. Paramo retrieved each of the checks from a friend and forwarded them to his brother, Jaime Paramo ("Jaime"), who maintained an account at a bank in Philadelphia. Jaime deposited the checks and later withdrew the cash. After each check was cashed, the participants divided the proceeds, which totalled approximately $204,000.

Following his arrest, Vega approached the government and proffered a statement explaining the criminal enterprise. Jaime followed soon thereafter. Approximately one month later, Paramo also agreed to cooperate. Counsel for both parties agree that Paramo's proffer comported with the statements given by Vega and Jaime in most material respects, except as to the division of proceeds.

The government offered Vega, Jaime, and later Paramo an opportunity to enter into plea agreements. In return for cooperating with the government and pleading guilty to the charges against them, the government offered to file a motion for downward departure at sentencing pursuant to section 5K1.1 of the Sentencing Guidelines. Vega and Jaime accepted the agreement and elected not to proceed to trial. After the district court granted the government's motions for downward departures, Vega and Jaime received sentences of eighteen months and twenty-four months imprisonment, respectively.

Paramo, however, refused to plead guilty to the money laundering charges because he believed that the specified sections of the money laundering statute did not apply to his conduct. The government responded with a letter to defense counsel, stating: "This letter shall confirm the government's withdrawal of the proposed § 5K1.1 plea agreement offer based on your client's refusal to plead to money laundering, the most serious readily provable offense." App. at 12. The letter continued: "In addition, the government has serious reservations concerning the truthfulness of your client's . . . proffer, which would preclude a § 5K1.1 plea." Id.

At trial, Paramo conceded most if not all of the factual predicates of the government's money laundering charges, but denied that these facts supported a conviction under the statute. Specifically, Paramo argued that the undisputed facts failed to support a finding that he participated in cashing the stolen checks "to promote the carrying on" of mail fraud. See 18 U.S.C. § 1956(a)(1)(A)(i) (1988). Paramo testified that the participants intended to steal only one check at any given time, and that neither he nor any of the other participants ever formulated an intent to steal a series of checks. Paramo also stated that the sole purpose of each check-cashing scheme was to pay bills and other personal expenses, and that none of the proceeds obtained from the earlier mail frauds were used to facilitate the subsequent ones. This testimony was consistent with testimony given by Vega and Jaime, both of whom testified for the government.

Defense counsel requested a jury instruction that "it is not sufficient that the defendant be shown to engage in the financial transaction simply to obtain the proceeds of a prior crime . . . . The government must prove . . . that the defendant engaged in the financial transaction to promote future criminal activity." App. at 33. The district court rejected the proposed instruction and instructed the jury that to obtain a money laundering conviction under section 1956(a)(1)(A)(i), the government had to prove beyond a reasonable doubt "that the Defendant acted with the intent to promote the carrying on of . . . mail fraud." Supp. App. at 387. The district court explained that to act intentionally means to act "with the deliberate purpose of promoting, facilitating or assisting the carrying on of mail fraud." Id. Over strenuous objection by defense counsel, the district court also gave the following supplemental instruction in response to a question from the jury:

It's for you to determine whether in this case, applying the definition that I've given you, whether the Defendant promoted or facilitated or assisted the carrying on the -- carrying out of the past mail fraud -- by depositing the check and engaging in the financial transaction. . . . [I] think you can see from my answer that you can promote, facilitate or assist in ways other than -- prospectively or in the future. It doesn't have to be a future mail fraud that is promoted, facilitated or assisted. It could be a past mail fraud. It can be an ongoing mail fraud . . . .

Supp. App. at 425. The jury returned a guilty verdict on all counts of the indictment, including money laundering.

At the sentencing hearing before the district court, the government did not request a downward departure for substantial assistance. Paramo claimed that Wade v. United States, U.S. , 112 S. Ct. 1840 (1992), authorized the district court to grant a departure even absent a government motion, because the government had an unconstitutional motive for withholding the motion -- to penalize him for exercising his right to a jury trial on the money laundering charges. Paramo argued that he gave assistance to the government equal to or greater than the assistance given by Vega and Jaime. He then pointed to the government's disparate treatment of him and the other defendants at sentencing as evidence of a vindictive motive. He also produced the government's letter to his lawyer, which confirmed the withdrawal of the proposed section 5K1.1 plea agreement "based on [Paramo's] refusal to plead to money laundering." App. at 12.

The government's responses to Paramo's claims were twofold. First, the government posited that withholding a substantial-assistance motion based on a defendant's refusal to plead guilty to certain charges would not be unconstitutional under Wade. The government argued that Wade prohibits only prosecutorial decisions motivated by race, religion, and "things of that nature." Supp. App. at 475. Second, the government stated that it refused to file a section 5K1.1 motion solely because Paramo failed to provide substantial assistance, not because he elected to go to trial. The government maintained that Paramo's assistance was insubstantial because he agreed to cooperate after two other participants in the scheme already had made complete proffers and then gave a dubious statement regarding the division of proceeds. The government also asserted that information supplied by Paramo regarding a putative fourth participant in the scheme was too vague to enable the government to locate the alleged co-conspirator.

The district court denied Paramo's motion for departure. Acknowledging first the government's claim that Paramo's assistance was not substantial, and then Paramo's claim that the government acted with an unconstitutional motive, the district court stated that it did not believe "that what the Government said in [the letter withdrawing Paramo's plea offer] is a Constitutionally impermissible reason as articulated in Wade." Supp. App. at 478. Paramo received a sentence of forty-six months imprisonment. This appeal followed.


Paramo claims that the evidence at trial failed to support his money laundering convictions under 18 U.S.C. § 1956(a)(1)(A)(i). The standard of review for a claim of insufficient evidence is whether substantial evidence supports the jury's verdict. United States v. Sturm, 671 F.2d 749, 751 (3d Cir.), cert. denied, 459 U.S. 842, 103 S. Ct. 95, 74 L. Ed. 2d 86 (1982). When deciding this issue, we consider the facts and all reasonable inferences following therefrom in the light most favorable to the government. Id.

Section 1956(a)(1)(A)(i) makes it unlawful to conduct a financial transaction involving the proceeds of unlawful activity "with the intent to promote the carrying on of specified unlawful activity." 18 U.S.C. § 1956(a)(1)(A)(i). Paramo concedes that by cashing the embezzled checks, he knowingly engaged in financial transactions involving proceeds of the unlawful activity of mail fraud. Paramo argues, however, that the evidence was insufficient to establish that he cashed the checks with the "intent to promote the carrying on" of mail fraud.

Uncontradicted evidence shows that Paramo and the other participants spent their respective shares of the mail fraud proceeds on personal items for themselves and their family members. The government presented no evidence suggesting that any of the participants funnelled their cash proceeds back into the mail fraud scheme or purchased any equipment, devices, or other objects to assist them in continuing the scheme. Accordingly, Paramo concludes that the evidence failed to establish the requisite intent to promote the carrying on of mail fraud.

Paramo relies for support on United States v. Jackson, 935 F.2d 832 (7th Cir. 1991). There, the defendant used cash proceeds from drug transactions to pay rent and to purchase telephone paging beepers and mobile car phones. The evidence showed that the defendant used the paging beepers as part of his continuing drug operation. Consequently, the court held there was sufficient evidence to support a finding that the defendant purchased the beepers to promote the carrying on of the drug scheme under section 1956(a)(1)(A)(i). Jackson, 935 F.2d at 841. The court reached a different Conclusion, however, with respect to the rental payments and mobile phone purchases, because the evidence failed to show that they played any role in the ongoing ...

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