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United States v. Mitchell

July 30, 2010


Appeal from the United States District Court for the Eastern District of Missouri.

The opinion of the court was delivered by: Wollman, Circuit Judge.

Submitted: April 15, 2010

Before WOLLMAN, MURPHY, and SHEPHERD, Circuit Judges.

Cully Mitchell was convicted of conspiracy to launder money, in violation of 18 U.S.C. § 1956. The district court sentenced Mitchell to forty-four months' imprisonment. Mitchell appeals his conviction and sentence. We affirm the conviction, but remand for reconsideration of the sentence.


An investigation led by Postal Inspector William Witt revealed that 290 postal money orders were purchased in St. Louis, Missouri, and cashed in Los Angeles, California, between 2003 and 2006. Initially, the money orders were purchased by Damion Epherson and cashed by him and others. Beginning on April 15, 2004, Mitchell began cashing some of the money orders. The money orders were purchased in denominations that usually totaled $2,800, which was $200 less than the threshold for reporting the transactions to the Treasury Department. The investigation revealed that fifty-six money orders, totaling $52,600, listed Mitchell as the payee or payor.

On August 12, 2007, Witt and Postal Inspector James Davis, went to the residence of Erika Whitaker, Mitchell's wife. Whitaker had cashed one of the money orders that listed Mitchell as the payor. At Whitaker's residence, Witt and Davis encountered Mitchell, who was living with Whitaker at the time. Witt and Davis explained that they were conducting an investigation into money laundering involving the use of postal money orders.

Mitchell cooperated with the investigators and candidly explained his involvement. According to Witt, Mitchell stated that Epherson was a childhood acquaintance and that Epherson had paid him between $50 and $100 for every $1,000 that he cashed. Mitchell stated that he believed Epherson was a drug dealer. On one occasion, Mitchell had asked Epherson to sell him an ounce of cocaine for personal use. According to Mitchell, Epherson declined, responding that he did not sell quantities that small. Mitchell stated that he had no first-hand knowledge of Epherson's business in St. Louis, but assumed that Epherson was selling drugs there. According to Witt, Mitchell also stated that he thought the funds used to purchase the postal money orders were derived from Epherson's drug business.

In May 2008, Epherson and Mitchell were indicted for money laundering. The indictment alleged that Mitchell "knowingly and willingly" conspired to launder the proceeds of "unlawful activity." The indictment further alleged that Mitchell had done so by structuring money order purchases from the Post Office, and that he had done so "knowing that the transaction is designed in whole or in part to conceal or disguise the nature, source or ownership of the proceeds of such unlawful activity."

Mitchell was tried in May 2009. At trial, Postal Inspector Witt was the sole witness. Witt sketched out the facts as set forth above, detailing his experiences investigating money laundering, discussing the documentary record in this case, and relating the statements that Mitchell made to him. Over Mitchell's objection, the government introduced Mitchell's tax return information for 2003, 2004, 2005, and 2006. Discussing this information, Witt explained to the jury that there was no record of Mitchell filing income taxes for those years. Mitchell's defense was that the government had not proved beyond a reasonable doubt that the money orders were purchased with funds from drug dealing, that Mitchell did not know that he was laundering money for a drug dealer, and that Witt's testimony about Mitchell's inculpatory statements was unreliable. The jury returned a verdict of guilty.

At sentencing, the court considered the recommendation of the presentence investigation report (PSR). The base offense level was eight. Six levels were added because the value of the funds involved was more than $30,000, but less than $70,000, pursuant to U.S.S.G. § 2B1.1(b)(1)(D). The PSR recommended a six-level increase pursuant to U.S.S.G. § 2S1.1(b)(1), because the defendant knew or believed the funds were the proceeds of, or intended to promote an offense involving the distribution of a controlled substance. The PSR also recommended a four-level increase because the defendant was "in the business of laundering funds," pursuant to U.S.S.G. § 2S1.1(b)(2)(C), for a total offense level of twenty-four. The PSR calculated Mitchell's criminal history category as I, for an advisory guideline range of fifty-one to sixty-three months' imprisonment.

Mitchell set forth his objections in a lengthy sentencing memorandum and iterated his objections at the sentencing hearing. R. at 20-46; Sent. Tr. at 2-6, 10-18. Mitchell objected to the enhancement for laundering funds derived from drug distribution and the enhancement for being in the business of money laundering. R. at 27-34; Sent. Tr. at 12-17. He claimed that he did not know the funds were the proceeds of or intended to promote the distribution of a controlled substance. R. at 28-29; Sent. Tr. at 12. Moreover, he argued that he was not in the business of laundering funds, describing his offense as an idiosyncratic scheme with a childhood friend. R. at 34; Sent. Tr. at 13-15. He stated that the evidence presented at trial showed that he received between $2,250 and $4,500 for negotiating the money orders, and that this was not a substantial amount of revenue. R. at 33-34; Sent. Tr. at 14. Last, he argued for a three-level minor role reduction. R. at 34-39; Sent. Tr. at 15-18. In sum, Mitchell believed that the appropriate offense level was 11, with a guideline range of 8 to 14 months' imprisonment. R. at 39; Sent. Tr. at 6.

The court denied Mitchell's objections and declined to grant a minor role reduction. The court, however, varied downward from the guideline range and sentenced Mitchell as set forth above.


A. Sufficiency of the Indictment

Mitchell argues that the indictment was deficient because it failed to allege all of the elements of the offense charged and that this deficiency was prejudicial. Specifically, he attacks the indictment for failing to allege that he knew the funds used ...

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