The opinion of the court was delivered by: Michael P. McCUSKEY Chief U.S. District Judge
This case is before the court for ruling on two motions filed by Defendants, Jimmy A. LaCost, Michael W. LaCost, and LaCost Amusements, Inc. (LaCost Amusements). This court has carefully considered the arguments presented by the parties and rules as follows: (1) Defendants' Motion to Dismiss Counts 56-109 of the Indictment (#32) is DENIED; and (2) Defendant's Motion for Entry of an Order Permitting their Counsel to Cause the Issuance of a Subpoena Duces Tecum to MainSource Bank (#50) is GRANTED in part and DENIED in part.
On January 6, 2010, the grand jury returned a 12-page, 109 count indictment (#1) against Defendants. In Counts 1 through 54, Defendants Jimmy LaCost and LaCost Amusements were charged with committing specified structured transactions over a period from January 25, 2005, to June 22, 2009, for the purpose of evading the reporting requirements of 31 U.S.C. § 5313(a), and regulations prescribed thereunder, while violating another law of the United States as set forth in Count 55 of the indictment, and as part of a pattern of illegal activity involving more than $100,000 in a 12-month period commencing on January 1, 2008, in violation of 31 U.S.C. § 5324(a)(3) and (d)(2), 18 U.S.C. § 2 and 31 C.F.R. § 103.11. In Count 55, all three Defendants were charged with conducting, financing, managing, supervising, directing, and owning part of an illegal gambling business, namely, a gambling business providing and maintaining video gambling machines and devices, in violation of 18 U.S.C. §§ 2 and 1955(a). In Counts 56 through 109, Defendants Jimmy LaCost and LaCost Amusements were charged with separate specified incidents of money laundering, from January 25, 2005, to June 22, 2009, in violation of 18 U.S.C. §§ 2 and 1956(a)(1)(B)(ii). The indictment also alleged that the property involved in transactions or attempted transactions in violation of 18 U.S.C. § 1956 is subject to forfeiture.
Defendants are represented by retained counsel and have pleaded not guilty to the charges.
On March 31, 2010, Defendants Jimmy LaCost and LaCost Amusements filed a Motion to Dismiss Counts 56-109 of the Indictment (#32) and a Memorandum in Support (#33). Defendants stated that Counts 56-109 charged them with committing separate money laundering violations of 18 U.S.C. § 1956(a)(1)(B)(ii) based on various deposits to the LaCost Amusements' bank accounts. Defendants argued that the money laundering counts fail to state offenses against them and should be dismissed. Defendants specifically argued that Counts 56-109 failed to allege "proceeds" and failed to properly allege specified unlawful activity.
On April 14, 2010, the Government filed a Response to Defendants' Motion to Dismiss Counts 56 to 109 (#41). The Government argued that "[e]ven a cursory review of the allegations contained in Counts 56 to 109 of the Indictment reveals that those counts do allege the laundering of 'proceeds.'" The Government also noted that Defendants, in arguing that the Indictment failed to properly allege specified unlawful activity, relied on their Motion to Dismiss Count 55. On April 21, 2010, Defendants filed a Reply (#44). Defendants again argued, strenuously, that the indictment is flawed because it does not allege that the charged financial transactions involve "proceeds."
On June 29, 2010, a status conference was held in this case. At the conference, Defendants made an oral motion to file a supplemental brief on the issue of the amendment to 18 U.S.C. § 1956. This court granted the oral motion and allowed Defendants until July 30, 2010, to file a supplemental brief. This court allowed the Government until August 27, 2010, to respond.
On July 12, 2010, this court entered an Opinion (#45) which, among other things, denied Defendants' Motion to Dismiss Count 55. On July 30, 2010, Defendants filed their Supplemental Brief on the Issue of the Amendment of 18 U.S.C. § 1956 (#49) and, on August 27, 2010, the Government filed its Response to Defendants' Supplemental Brief (#51).
First of all, this court agrees with the Government that Defendants' argument that Counts 56 through 109 failed to allege specified unlawful activity was based upon their Motion to Dismiss Count 55. Because this court has denied that Motion, this argument can have no merit.
As far as Defendants' remaining argument regarding "proceeds," Defendants and the Government agree that the term "proceeds" was limited by the United States Supreme Court's plurality decision in United States v. Santos, 553 U.S. 507 (2008) to net proceeds in cases, like this one, involving illegal gambling. However, Defendants and the Government also agree that 18 U.S.C. § 1956 was amended on May 20, 2009. By enacting the amendment, Congress effectively overruled Santos's plurality opinion so that, for all money laundering offenses occurring after May 20, 2009, "proceeds" means "gross proceeds." The amendment does not apply retroactively.
In this case, only Count 56 is alleged to have occurred after the effective date of the amendment, May 20, 2009. Counts 57 through 109 are alleged to have occurred prior to May 20, 2009. Defendants argue that Counts 57 through 109 must be dismissed based upon Santos. Defendants also argue that Count 56 should also be dismissed based upon a "merger problem" because "the alleged money laundering transaction is part and ...