Testimony on Behalf of Michael Piervinanzi
from Robin Piervinanzi
at Public Hearing on U.S. Sentencing Guidelines
March 12, 1998 - Washington, DC
I want to thank you for allowing me to speak today. I have come here to tell you about the case of my brother Michael Piervinanzi. I think it illustrates a problem which the United States Sentencing Commission has devoted substantial attention to, namely, the use of the money laundering guidelines in cases where fraud charges and money laundering charges are included in the same indictment.
The introductory pages of the Federal Sentencing Guidelines Manual sets forth three goals the Congress had in mind when it enacted the Sentencing Reform Act of 1984: 1) honesty in sentencing, 2) uniformity in sentencing and 3) proportionality in sentencing. Use of the guidelines for the past ten years appear to have eliminated much of the disparity in sentencing that prevailed in the pre-guideline era.
However, there is significant evidence that present use of money laundering charges and applications of the money laundering guidelines, rather than functioning to reduce disparity are, in fact, contributing to an increase in disparity especially in cases where fraud and money laundering charges are joined in the same indictment. In the hope that what I have to say about my brother*s case will contribute to a better understanding of this problem, let me describe his case.
My brother Michael was arrested in 1989. He was one of seven people accused of participating in a scheme to steal 38 million dollars from two banks by wire transferring the money to a foreign bank in the Cayman Islands. One of the defendants obtained information about certain bank accounts and banking procedures which made the scheme possible. The first case involved the transfer of 14 million dollars from the Irving Trust Company. The second case involved the transfer of 24 million dollars from Morgan Guaranty. In order to wire transfer money from a domestic bank to a foreign bank overseas, it is necessary for the foreign bank to designate a correspondent bank here in the United States. Wire transfers move from the domestic bank to the correspondent bank and then on to the foreign bank.
Both schemes failed. In the Irving Trust case, the bank learned of the fraud before any funds could be transferred. In the Morgan Guaranty case, funds were wire transferred to the correspondent bank. Morgan Guaranty then discovered that the transfer was unauthorized and immediately reversed the transfer. The banks did not lose any money. My brother and one other person went to trial. The government presented a seven count indictment charging conspiracy to commit wire fraud, bank fraud and money laundering; two counts of attempted bank fraud, wire fraud; two counts of attempted money laundering under 18 USC 1956(a)(2) and one count of attempted money laundering under 18 USC 1957(a). The jury found him guilty on all counts. At sentencing on the attempted money laundering charge, he requested a downward departure on the grounds that the conduct charged--attempted bank fraud--was outside the heartland of money laundering conduct. The court denied his request. The court imposed seven concurrent sentences of 210 months or 17-1/2 years. Under Section 2S1.1, the court found a base level of 23 and added 11 levels for the amount of money, bringing his total to level 34. Under category three (my brother had prior convictions for gambling offenses) his sentence range was 188 to 235 months. 210 months represented the middle of the sentencing range.
On appeal to the Second Circuit, he argued that the evidence was insufficient to support a charge of money laundering or attempted money laundering. In an opinion reported as United States v. Piervinanzi, 23 F.3d 670 (2nd Cir.1994) the Court rejected his argument and found that the attempted money laundering charge under 18 USC 1956(a)(2) was established because the attempted transfer of funds overseas was designed to promote the underlying crime of bank fraud, (at page 679). The court dismissed the charge of attempted money laundering under 1957(a) because the funds transferred from Morgan Guaranty were not yet property derived from wire fraud and bank fraud and 1957 did not apply.
The Appeals Court remanded the case for sentencing because the charges of conspiracy, attempted bank fraud and wire fraud carried a maximum penalty of five years. The trial court*s sentence exceeded the 5-year maximum. On resentence, the court imposed four concurrent 60- month sentences on those charges. The court also reduced the sentence on the money laundering convictions from 17-1/2 years to 15-1/2 years.
I believe my brothers case represents an overly broad interpretation of money laundering activity. His crime was not connected to organized crime or drug trafficking activity. There was no intent to use the funds to promote additional criminal activity. Because his indictment contained money laundering charges in addition to the attempted bank fraud, my brother is serving 10-1/2 years more than he would be serving for the same criminal activity if there were no money laundering charges. His was one of the first cases of money laundering to be tried in the Southern District of New York. The Second Circuit had to rely on decisions from other circuits to support their argument that money laundering charges had been proven. The Court cited three cases, United States v. Cavalier, 17 F.3d 90, (5th Cir.1994); United States v. Paramo, 998 F.2d 1212 (3rd Cir.1993) and United States v. Montoya, 945 F.2d 1068 (9th Cir.1991). The Sentencing Commission, in its Sept. 18, 1997 Report to Congress, cites the very same cases to highlight its concern that the application of the money laundering statutes to cases of fraud and bribery and other non-drug related activity is leading to disparity in sentencing. I note parenthetically that the opinion in my brothers case has never been cited as support for the proposition that fraud activity such as his also constitutes money laundering. The case is cited by other courts but for legal principles unrelated to the money laundering analysis.
In closing, I wish to say that I agree with the Commission that changes in the guidelines are needed. I do not claim to know what these changes should be. But, if the Commission could devise a more flexible guideline structure that would require courts to examine underlying criminal conduct and consider what connection and relationship such conduct has with money laundering charges in deciding what punishment should be imposed, many of the problems giving rise to disparity would be significantly reduced.
Thank you for your consideration.