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