United States District Court, D. South Dakota, Southern Division
EUGENE H. MATHISON, Petitioner,
DAVID BERKEBILE, Warden, Respondent.
MEMORANDUM OPINION AND ORDER RE: VACATING CONVICTIONS AND RESENTENCING
LAWRENCE L. PIERSOL, District Judge.
In its Memorandum Opinion and Order in the above case dated December 20, 2013, the Court allowed the Respondent until December 31, 2013, to brief the issue ofjudicial estoppel and directed the parties to later submit simultaneous briefs on which of Mathison's convictions should be vacated, and what impact the same should have on the calculation of a sentence at a resentencing. Doc. 21. The Respondent did not brief the issue ofjudicial estoppel, and the Court released Mathison on bail on January 3, 2014. Doc. 22. The parties have now submitted simultaneous briefs on which of Mathison's convictions should be vacated.
Although Respondent still has not challenged the application of judicial estoppel, Respondent in the most recent submission relies on a concurring in part and dissenting in part opinion in United States v. Prost, 636 F.3d 578, 602-03 (10th Cir. 2011) (J. Seymour, concurring in part and dissenting in part), as support for his position that Mathison was not procedurally obstructed from raising a Santos claim by Eighth Circuit precedent. The majority opinion in Prost, however, rejected this view by stating:
After all, the Eighth Circuit appears to agree with Mr. Prost that its RICO precedent did preclude the reading of the money laundering statute later adopted in Santos. See United States v. Williams, 605 F.3d 556, 567 (8th Cir. 2010). So to reach the result it advocates, the concurrence has to disagree with the Eighth Circuit's reading of its own precedent.
Prost v. Anderson, 636 F.3d at 595. This Court, likewise, will not disagree with the Eighth Circuit's reading of its own precedent.
Mathison takes the position that pursuant to the Supreme Court's holding in United States v. Santos, 553 U.S. 507 (2008), each of Mathison's money laundering convictions (Counts 32-37 and 53-61) should be vacated, as well as his convictions for engaging in monetary transactions in violation of 18 U.S.C. § 1957 (Counts 51-52). Mathison bases his position on Justice Stevens' concurrence in Santos holding that when a merger problem exists, then "proceeds" may be defined as "profits." In United States v. Rabachkin, the Eighth Circuit acknowledged that under Justice Stevens' controlling concurrence "proceeds' must mean profits' whenever a broader definition would 'perverse[ly]' result in a merger problem.'" 655 F.3d 849, 865 (8th Cir. 2011) (quoting Santos, 553 U.S. at 527, 528 n.7). As the Eighth Circuit explained in Rabashkin:
The controlling concurrence, which created a majority, explained that it could be unfair to [a]llow [ ] the Government to treat the mere payment of the expense [of committing an offense] as a separate offense, " Id. at 527, 128 S.Ct. 2020. Such punishment would be "in practical effect tantamount to double jeopardy, " id., since the unlawful activity that produced the proceeds "would merge' with money laundering." Id at 516, 128 S.Ct. 2020 (plurality opinion).
655 F.3d at 864-865.
Respondent takes the position that if the Court has the authority to resentence Mathison - and the Court maintains that it does, Counts 32-37, 53 and 59-61, involving payments to victims of the Ponzi scheme, and Counts 54, and 56-58 involving payments to co-defendants, constitute a merger and do not involve profits required to sustain a conviction under Santos. Respondent maintains, however, that Counts 51 and 52, were transfers to Eldred Evey, who was not a co-defendant in the Ponzi scheme to defraud investors who believed they were investing in the commodities market, and cites to United States v. Mathison, 157 F.3d 541, 545 (8th Cir. 1998), for the following characterization of the transfers involved in Counts 51 and 52: "Mr. Mathison laundered some of this money by wiring it to an associate at a bank in Arizona, who then wired the money back to Mr. Mathison, or into another account, at his direction."
In the Second Superseding Indictment Mathison was charged with and the jury convicted him of mail fraud, wire fraud, conspiracy and money laundering. Mathison was charged in Count 32 through 39 with money laundering, in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i) and 1956 (a)(1)(B)(i),  for mailing checks to victims of the Ponzi scheme under the pretense of the money representing profits from a commodities investment. Paragraph 6 of the Second Superseding Indictment alleges "It was part of the scheme and artifice to defraud that Eugene H. Mathison would obtain money from other victims when it became necessary to return some money to earlier victims."
Justice Stevens observed:
The Government suggests no explanation for why Congress would have wanted a transaction that is a normal part of a crime it had duly considered and appropriately punished elsewhere in the Criminal Code to radically increase the sentence for that crime. Interpreting "proceeds" to mean "profits" eliminates the merger problem.
Santos, 553 U.S. at 517. Since the conduct that was charged in Counts 32 through 39 is a normal part of the mail fraud that was encompassed within Mathison's prosecution, and mail fraud, at that time, was punishable by imprisonment of not more than five years, Counts 32 through 39 constitute a merger problem and the Court is vacating the convictions for these Counts. See Garland v. Roy, 615 F.3d 391 (5th Cir. 2010) (Defendant in illegal pyramid scheme entitled to habeas relief under 28 U.S.C. 2241 when the same transaction may have been used to prove both the underlying unlawful activity and the money-laundering charges).
In Counts 51 and 52 Mathison was charged with and the jury convicted him of money laundering, in violation of 18 U.S.C. § 1957. 18 U.S.C. § 1957 criminalizes engaging in a monetary transaction in criminally derived property of a value greater than $10, 000 derived from specified unlawful activity. Counts 51 and 52 involved wire transfers of $20, 000 and $12, 000 to Eldred Evey. Evey was employed by a bank in Arizona. Mathison or his co-defendant Dean Chamber wired funds to Evey, who then made a wire transfer of the funds to Euro Capital Markets, a company associated with Ronald Totaro. TT 1247-1262. Totaro was later convicted of sixty-one counts of mail fraud, wire fraud, money laundering, engaging in unlawful money transactions and racketeering, after posing as an international banker and pocketing ill-gotten advance fees. See United States v. Totaro, 40 Fed.Appx. 321 (8th Cir. 2002). Evey was not a victim of Mathison's Ponzi scheme and the ...