Practice Problem: U.S. v. Rivera-Rodriguez & Trinidad

Basilio Rivera Rodriguez and Oscar Trinidad Rodriguez are charged with conspiring to launder money under 18 U.S.C.§§ 1956(a)(1)(B) and (h). Rivera and Trinidad are accused of participating in transactions to launder the millions of dollars in profits from a long-running operation for one Colon, who smuggled cocaine into Puerto Rico between 1987 and 1996.

As the indictment was framed, the government had to show that each defendant:

1. conducted “a financial transaction” involving the proceeds of some form of unlawful activity, “knowing” that the proceeds were thus tainted; and
2. knew that the transaction was “designed in whole or in part . . . to conceal or disguise the nature, the location, the source, the ownership or the control of the proceeds . . . .”

18 U.S.C. §1956(a)(1).

Trinidad

In 1994, Trinidad, who raced speedboats, was introduced to Colon, who was also a speedboat enthusiast. Colon and Trinidad claim that at this meeting Colon held himself out as a legitimate car and cattle businessman. As a result of their meeting, Colon suggested that they purchase an expensive speedboat, Budweiser, as a joint venture.

In May 1994, Colon took $100,000 from a hiding place on a cattle farm and gave it to Trinidad. Trinidad then gave two associates $18,000 of the money to purchase two manager’s checks apiece from different banks in the amount of $9,000 each. Trinidad himself also purchased manager’s checks in approximately the same amount from two different banks. These checks totaling $36,000, along with other funds contributed by Colon totaling $100,000, were deposited in a boat merchant’s bank account, and were used to buy Budweiser.

The title of the boat eventually was placed in Trinidad’s name. Trinidad claims that it was placed in his name because the two of them had a sports partnership. Trinidad, however, put up no money for the purchase of the speedboat, and it was Colon alone who later decided to sell it. However, during a tax investigation, Trinidad falsely told local agents that he had paid for the boat.

Trinidad also aided Colon in similar transactions. On at least one occasion, he carried $200,000 in cash to Florida as part of the purchase of another speedboat for Colon. (Trinidad claims that although he knew he was carrying cash for Colon, he did not know the amount.) Colon also gave Trinidad over $60,000 in cash to pay for boat maintenance and parts. Trinidad also assisted Colon in the latter’s unsuccessful attempt to buy a South Florida apartment for cash. With Trinidad’s help, Colon patently splintered the deposits to amounts just under $10,000, a step that served only to avoid bank reporting.

Trinidad has admitted that he knew the transactions he took part in were designed to conceal the source of the funds involved; the size of the cash transactions together with the use of $9,000 deposits, just under the limit for bank reporting, bears this out. But he insists that he did not know that the transactions involved illegal proceeds, nor did he know that that Colon had been a drug dealer.

Rivera

Basilio Rivera-Rodriguez operated a business called BVF Construction. The indictment is focused on a set of transactions made by Colon and Rivera through that business. In the first of these, which took place in June 1995, Colon gave Rivera upwards of $105,000 (of which $89,000 was in cash) to deposit in a BVF bank account. Rivera then purchased a manager’s check in the amount of $105,000, which was then given to a boat company . . . as payment for a 46-foot racing boat. Colon then took possession of the boat. Later, in November, Rivera wrote checks from the BVF account to Colon for $2,900 in unspecified boat expenses.

In the second set of transactions, Colon in August 1995 wrote a check to BVF Construction for $130,000. On the same day, Colon’s father wrote a check for $65,000 to BVF, drawing upon his son’s drug money. This money was deposited in a BVF account, where it stayed, untouched, until November 1995, when Rivera wrote checks to Colon for nearly the full amount deposited – $192,900.

The government’s theory is that Rivera’s BVF corporation effectively served as a clearing house for Colon’s drug funds. Thus, when Colon decided to purchase the boat, he did it with money channeled through BVF to muddy the trail of the purchase. Similarly, by depositing $195,000 in the BVF account and withdrawing it later, the government argues that Colon hoped to give that money a patina of legitimacy.

Colon claimed in grand jury testimony that he had given funds to BVF to invest in the construction of ATM bank branches, and that he then withdrew some of the funds when he needed to make other purchases. Colon admitted that no bank branches were ever built. But the government has evidence that Rivera, in a deposition in a civil case, said that the payments to Colon were for labor that Colon had performed—yet Colon claims that he had never performed any labor for Rivera or BVF.

Rivera insists that he did not conspire with Colon, did not know that the transactions were intended to disguise the source of funds, and did not know that the funds were the proceeds of drug dealing or any other unlawful activity. And the government acknowledges the truth that payments by anyone—even a drug dealer—to a business and payments back out may be legitimate in context: Colon could have sent a check to a mutual fund and received dividends in exchange. But the prosecutors believe that, in light of the evidence showing the particular details and events in these cases, that they can prove the defendants’ liability.

Are they correct? Consider that question in two parts:

1) Must the defendants know specifically what type of felony spawned the proceeds, or but only that the proceeds are the product of some criminal activity?

2) Does the government have sufficient evidence to prove the defendants’ guilt under 18 U.S.C.§§ 1956(a)(1)(B) and (h)? Describe why or why not.