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United States v. Carter

August 19, 2008


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 04 CR 308-Harry D. Leinenweber, Judge.

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


Before RIPPLE, WILLIAMS and SYKES, Circuit Judges.

Virginia Carter was convicted by jury of tax fraud, in violation of 26 U.S.C. § 7206(1), money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i), and engaging in monetary transactions knowing that the property involved represents the proceeds of an unlawful activity, in violation of 18 U.S.C. § 1957. The district court sentenced her to twenty-four months' imprisonment, a sentence below the advisory guidelines range.*fn1 The Government timely appealed the sentence. For the reasons set forth in this opinion, we affirm the judgment of the district court.*fn2


Robert Carter embezzled money from his insurance business over several years. In 1999 and 2000, his accountant prepared tax returns that reported a total income from those years of less than $300,000. These returns under-reported the Carters' income by nearly $1,700,000. His wife, Virginia Carter, signed those joint tax returns.

In 2002, Ms. Carter filed for a divorce from Robert. Her divorce attorney was unaware that much of the couple's money had been obtained through fraud, and he recom-mended that she attempt to take control of the couple's liquid assets in order to secure those funds in the pending proceedings. In that year, Ms. Carter transferred more than $3,900,000 into new and previously existing bank accounts bearing only her name.

Ms. Carter was charged with two counts of tax fraud for*fn3 also charged with twenty-three counts of money laundering, twenty-two of which went to trial. Eighteen of the money laundering counts that went to trial were based on allegations that, from March 29 to September 18, 2002, Ms. Carter had engaged in monetary transactions to disguise the proceeds of fraud, in violation of 18 U.S.C. § 1956.*fn4 The other four counts of money laundering were under-reporting her income in 1999 and 2000. She was based on allegations that Ms. Carter had engaged in financial transactions with the proceeds of fraud between April 10 and April 29, 2002, in violation of 18 U.S.C. § 1957.*fn5 Ms. Carter testified at her trial and denied the tax fraud and money laundering allegations. The jury found her guilty on all counts.

At sentencing, the district court heard arguments by Ms. Carter and the Government regarding the presentence investigation report ("PSR") and the calculation of the advisory guidelines range. The court then determined the base offense level for Ms. Carter's offenses to be 29, which included a two-level increase for obstruction of justice. The resulting advisory guidelines sentencing range was 87 to 108 months' imprisonment. After considering the factors set forth in 18 U.S.C. § 3553(a), the district court imposed a sentence of 24 months' imprisonment. The district court stated:

Well, I don't see any legal basis for a departure, so that leaves the issues raised by Section 3553 in determining a sentence that is proper under the facts of the case, and not greater than necessary, to supply the reasons for the penalties in our criminal justice system.

There is no question that the Federal law was broken in this case. A jury so found that Mrs. Carter broke the law on a number of occasions, I think there was something like 30 counts.

As I looked over the counts to which she was found guilty, the tax counts-the first year, 1999, certainly I think that a spouse who is faced with a tax return that is only $40,000 out of whack probably wouldn't notice it. But the next year when they went on the wild spending spree it kind of defies reason that you wouldn't look at the return and say, Wait a minute, there is something wrong here.

I believe that at some point Mrs. Carter must have known her husband was stealing money because their spending went from one level to an entirely different level.

There is no question that when her husband was on his way to prison, or was about to go to prison, she took it upon herself to try and take this money and make it as difficult as possible for anybody, including creditors and the government and the tax people, from collecting it.

So, she violated the law, and the law she violated was structuring and money laundering. Having said that, this is obviously not a paradigm of the money laundering cases.

The article in the sentencing guidelines by the Commission indicates that Congress' original purpose was, in the context of organized crime, to prevent proceeds from crimes from being used to commit other crimes. However, it is still a violation of the law, which she did.

Now, in considering what an appropriate sentence in this case is, it does seem to me that it would be entirely improper to give her a sentence that was similar, or certainly higher, than what her husband got. Her husband was the source of the illegal funds. She did benefit from them though, there is no question about that.

Now, he got, I believe, 71 months, which is certainly in my judgment an appropriate judgment in the fraud conduct in which he engaged in. I think, on the other hand, we do have the age of Mrs. Carter, she is 61, and that is not the age of your normal criminal that comes before the Court for sentencing.

I do think that she probably did freak out when she found out that her husband was basically on his way to prison and had stolen all this money, and I think she acted to a certain extent out of an attempt to protect herself, which I believe, if I remember correctly, I think her divorce lawyer said that he had suggested that that money be put in her name that she was aware of, because I think they were contemplating a divorce.

Now, that is not an unusual recommendation. Having never been a matrimonial lawyer it is my understanding that matrimonial lawyers always tell the wife, If you can do it, get the money in your name and fight about it later in court rather than let your husband take it and you have to fight for it. It is the old, A bird in the hand is worth two in the bush.

So, her actions are not-while certainly not legal, were not wholly not understandable.

I believe also that she probably-I am certain she didn't anticipate the consequences of her actions. She may have known they were illegal, but certainly didn't expect them to be to the extent where she would be ...

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