United States District Court, Middle District of Pennsylvania
December 13, 2000
UNITED STATES OF AMERICA
DANIEL BIFIELD, BEVERLY DAVIS, WILLIAM MCDERMOTT, STEPHEN MONTGOMERY, DEFENDANTS.
The opinion of the court was delivered by: James F. McClure, Jr., United States District Judge. I. Procedural History
On August 27, 1997, a grand jury sitting in the Middle District
of Pennsylvania returned an indictment charging defendants Janet
Bifield, Daniel Bifield, Beverly Davis, William McDermott, Thomas
Harrison, Robert L. Sizemore, and Barry Spell with conspiracy to
commit money laundering in violation of 18 U.S.C. § 1956(h).
The case against Spell was transferred to the United States
District Court for the District of Nevada pursuant to Fed. R.
Crim. P. 20. Spell entered a plea of guilty to the conspiracy
charge and was sentenced to a period of incarceration of 63
months, to be followed by a 3-year term of supervised release.
Sizemore entered a plea of guilty to Count One of the indictment
on December 4, 1997. Janet Bifield entered a plea of guilty to
Count One on January 26, 1998.
On June 24, 1998, a grand jury sitting in the Middle District
of Pennsylvania returned a superseding indictment charging the
same offense against defendants Daniel Bifield, Davis, McDermott,
Harrison, and Stephen Montgomery. Harrison entered a plea of
guilty to Count One on September 30, 1998. Montgomery entered a
plea of guilty to Count One on October 1, 1998. Only Daniel
Bifield, Davis, and McDermott proceeded to trial, and all three
were found guilty by a jury on November 9, 1998.
Defendant Diane Oberley was charged separately under §
1956(h) by information filed December 12, 1996. and she entered a
plea of guilty on January 13, 1997. Defendant Erica Rowlands was
charged under § 1956(h) by information filed January 14,
1997, and she entered a plea of guilty on February 11, 1997.
Pre-sentence reports were ordered and obtained for each
Between January 29 and March 19, 1999, the court heard evidence
and argument related to the objections to the PSR's, and any
motions for upward or downward departures from the imprisonment
range as determined under the Sentencing Guidelines. Sentencing
was deferred pending hearing all of this evidence and argument,
so that the court would have complete information available and
so that the sentences imposed would be consistent among the
The court then issued a comprehensive memorandum on March 25,
1999 as to nine defendants charged with, among other things,
conspiracy to commit money laundering of the proceeds received
from the state income tax fraud instigated primarily by federal
inmates Rodney Archambeault and Anthony Pfeffer. United States v.
Bifield, 42 F. Supp.2d 477 (M.D.Pa. 1999). The defendants were
then sentenced within the ranges reflected in Table 1 attached to
the order which accompanied that memorandum. of the four
defendants now before the court, Daniel Bifield, William
McDermott and Beverly Davis were sentenced on April 1, 1999 and
Stephen Montgomery, on May 27, 1999. All four filed direct
appeals and, on October 16, 2000 the United States Court of
Appeals for the Third Circuit remanded the case to this court.
The judgments of conviction entered April 21, 1999 and May 27,
1999, respectively, were vacated, and the matters remanded for
consideration in accordance with the Third Circuit's decision in
the case of United States v. Bockius, No.
99-1973, filed September 25, 2000, 228 F.3d 305 (3d Cir. 2000)
On October 18, 2000 this court entered an order directing
briefing on the matter. The court directed counsel to address the
manner in which the Third Circuit opinion in Bockius should
apply to the resentencing of each defendant. The court further asked
counsel to suggest to the court how it should engage in the
two-step inquiry outlined in Bockius and United States v.
Smith, 186 F.3d 290 (3d Cir. 1999) referenced in the
Bockius opinion. We indicated particular interest in learning
how the Smith/Bockius two-step inquiry differs from the
analysis which this court undertook and recited in its memorandum
of March 25, 1999, and why the result should be different from
that reached by the court at that time.
The matter has now been fully briefed, and resentencing is
scheduled for December 21, 2000.
II. Application of Money Laundering Guideline
A problem common to all of the defendants was the base offense
level for conspiracy to commit money laundering. For reasons set
forth at length in our March 25, 1999 memorandum, we settled upon
a base level of 20 rather than 23 under USSG § 2S1.1(a)(1).
As Table 1 attached to that order clearly sets forth, a number of
adjustments were made in each case. Most significantly, the court
denied defendants' motions to depart downward from the
Guidelines, rejecting their argument that the offenses committed
by these defendants did not fall within the heartland of money
laundering cases, but rather should be sentenced under the
underlying tax fraud scheme that provided the source of the money
to be laundered. The difference is significant. The base offense
level for tax fraud under USSG § 2F1.1 is 6.
In Bockius, the district court had read the Third Circuit's
opinion in Smith as limiting the heartland of USSG § 2S1.1
to "the money laundering activity connected with extensive drug
trafficking and serious crime." 186 F.3d at 300. The Third
Circuit in Bockius, however, made clear that this was a
misinterpretation of Smith, and remanded the case to the
district court with instructions to "engage in a heartland analysis
before applying the money laundering guideline." 228 F.3d at 313.
The court in Bockius further stated: "Where money is not
`minimal or incidental,' and is `separate from the underlying crime' and
intended to `make it appear that the funds were legitimate' or to
funnel the money into further criminal activities § 2S1.1 is
an applicable guideline." Id.
We believe that, as a result of the remand in this case, we are
instructed to conduct a similar "heartland analysis" to determine
whether we appropriately applied the money laundering guideline.
We did apply the heartland analysis in determining that a
downward departure from the money laundering guideline to the tax
fraud guideline was not appropriate. The court in Bockius had
this further comment on Smith:
Smith held that under Appendix A to the Guidelines manual, a
sentencing court must engage in a two-step inquiry before
applying a particular guideline section.
1. Does the designated guideline apply or is the
conduct `atypical' in comparison to that usually
punished by the same statute of conviction; and
2. If the conduct is `atypical,' which guideline is
Smith, 186 F.3d at 297 (citing United States v. Voss,
956 F.2d 1007, 1009 (10th Cir. 1992), superseded in part
on other grounds by amendment to U.S.S.G. § 2D1.1).
Atypical money laundering conduct is conduct
outside the heartland of § 2S1.1. See Smith, 186 F.3d
at 297-98. When deciding whether to apply the
guideline, a court must undertake a heartland analysis
`identical' to that employed when evaluating downward
departures under U.S.S.G. Ch. 1, Pt. A, intro, comment.
4(b). Id. at 298.
Id. at 311.
As we undertook a heartland analysis in our March 25, 1999
memorandum to evaluate the motions for downward departure and as
that analysis is "identical" to that which must be used in
determining whether to apply the guideline, then it would appear
that we have already undertaken the analysis implicated by the
remand directive, albeit for a different purpose. Therefore, for
all of the reasons set forth in our memorandum of March 25, 1999,
we now restate that we find the conduct of these four defendants
to fall within the heartland of "ordinary money laundering" and
not to be "atypical money laundering conduct."
III. Clarifying Guideline Amendments
Another intriguing question now presents itself to the court as
a result of the remand order vacating the original sentences.
Resentencing is now scheduled for December 21, 2000. A new
guidelines manual has just been issued by the United States
Sentencing Commission which includes all amendments effective
through November 1, 2000. According to the guidelines, "the court
shall use the Guidelines Manual in effect on the date the
defendant is sentenced." USSG § 1B1.11(a) . Generally, the
court is required to apply the guidelines and commentary in
effect at the time of sentencing. United States v. Joshua,
976 F.2d 844, 853 (3d Cir. 1992) (citing 18 U.S.C. § 3553(a)
(4)-(5). It could be quite reasonably argued that, as the previous
sentences were vacated, the new Guidelines Manual is the one to
be used for the sentencing to take place December 21, 2000.
In Amendment 591, made effective November 1, 2000, the
Sentencing Commission amended USSG § 1B1.1. In explaining its
reasons for the various amendments made under Amendment 591, the
Commission included the following statement:
The amendment modifies §§ 1B1.1(a), 1B1.2(a), and the
Statutory Index's introductory commentary to clarify
the inter-relationship among these provisions. The
clarification is intended to emphasize that the
sentencing court must apply the offense guideline
referenced in the Statutory Index for the statute of
conviction unless the case falls within the limited
`stipulation' exception set forth in § 1B1.2(a).
Therefore, in order for the enhanced penalties in
§ 2D1.2 to apply, the defendant must be convicted of an
offense referenced to § 2D1.1, rather than simply have
engaged in conduct described by that guideline.
Furthermore, the amendment deletes Application Note 3
of § 1B1.2 (Applicable Guidelines), which provided that
in many instances it would be appropriate for the court
to consider the actual conduct of the offender, even if
such conduct did not constitute an element of the
offense. This application note describes a
consideration that is more appropriate when applying
§ 1B1.3 (Relevant Conduct), and its current placement in
§ 1B1.2 appaently has caused confusion in applying that
guideline's principles to determine the offense conduct
guideline in Chapter Two most appropriate for the
offense of conviction. In particular, the note has
been used by some courts to permit a court to decline
to use the offense guideline referenced in the
Statutory Index in cases that were allegedly "atypical"
or "outside the heartland." See United States v.
Amendment 591, Supplement to Appendix C, November 1, 2000, pp.
In USSG § 1B1.11(b)(2), the Commission states that "if a
court applies an earlier edition of the Guidelines Manual, the
court shall consider subsequent amendments, to the extent that
such amendments are clarifying rather than substantive changes."
Here, the Commission has expressly stated that the amendments are
done "to clarify the interrelationship among the various
provisions." "The clarification
is intended to emphasize that the sentencing court must apply the
offense guideline referenced in the Statutory Index for the statute
of conviction. . . ." Thus, even if it were deemed more appropriate
at resentencing to apply the Guidelines Manual used at the time of
the initial sentencing, the court could and should properly consider
the subsequent amendments which have been made to clarify existing
provisions. See United States v. Bass, 54 F.3d 125 (3d Cir. 1995);
Therefore, if the court were to apply the clarifying amendments
contained in Amendment 591, the basic premise for the decisions
in Smith and Bockius has been removed: For the purpose of
determining the applicable guideline, the court does not engage
in a "heartland" analysis, but simply applies "the offense
guideline referenced in the Statutory Index for the statute of
conviction." Here, the limited "stipulation" exception set forth
in § 1B1.2(a) is completely inapplicable.
This court has been directed to reconsider the matter in
accordance with the Third Circuit's decision in Bockius, and
we have done so. We find that our "heartland" analysis for purposes
of considering requests for a downward departure is equally
applicable to a determination of whether or not this should be
considered a typical or atypical case for the purpose of
determining the applicable offense guideline. Nevertheless, it
would now appear that such an analysis is unnecessary and,
indeed, inappropriate, given the clarifying amendments made to
become effective November 1, 2000, removing the ambiguity which
spawned the Smith and Bockius decisions.
For all of these reasons, the court will make no change from
its order of March 25, 1999, and intends to resentence all four
defendants to the identical sentences imposed initially on April
21, 1999 and May 25, 1999, respectively.
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