Whitfield, David v. U.S. / Hall, Haywood v. U.S. (01/11/2005)

Questions presented: Whether a conviction for conspiracy to commit money laundering, in violation of 18 U.S.C. 1956(h), requires proof of an overt act in furtherance of the conspiracy?BY STACEY HARMS, MEDILL NEWS SERVICE

"Give, and it shall be given unto you." Luke 6:38.

This Bible verse was one of several used by a church in an elaborate money-laundering scheme in the '90s that convinced 18,000 Christians to invest hundreds of millions of dollars.

Beginning as early as March of 1993, Gerald Payne founded Greater Ministries International Church, the enticement in a fraudulent investment program in which Christians would "gift" money to the church and within 17 months the investors were to receive a "giftback" of double their investment.

Church elders traveled around the country and held "roadshow" meetings to promote the "Double Your Money Program," later known the "Double Your Blessings Program" and the "Faith Promises Program." Using scripture, including Luke 6:38 and the parable of the multiplication of the fishes and the loaves, these elders told potential "giftors" of the money they would make with their tax-free gifts.

The Greater Ministries gifting program is what is known in the financial world as a Ponzi scheme. Under investment schemes of this kind, money invested by later clients is used to pay the initial investors, who often get unusually high dividends and therefore attract new investors. Few or no additional revenue-generating activities are necessary since newer clients will keep paying for earlier investors.

Greater Ministries elders kept the cash circulating through the programs by strongly encouraging existing investors to "re-gift" their earnings instead of withdrawing funds. The giftors were told profits were generated through such investments as offshore drilling and gold, silver and diamond mines, when the church actually had few assets. Most of the money came from other investors, and many saw little or no return on their gifts.

Haywood "Don" Hall joined Greater Ministries in 1996 as a pastor, elder and president. David Whitfield was the church treasurer and financial officer, as well as an elder.

As elders, each received monthly "gas money" paid in cash by Payne, which was 5 percent of the money that director brought in through gifts or re-gifts. Investors were not told of these commissions.

The church finally collapsed in January of 1999 after a four-year federal investigation. Over the almost six years in existence, church records show the scheme collected about $500 million, of which Hall had received commissions totaling more than $539,000 and, Whitfield got more than $678,000.

Hall, Whitfield, Payne, and two other Greater Ministries elders were indicted on federal charges including conspiracy to commit mail fraud, mail fraud, and conspiracy to commit money laundering. They were tried by a jury in the U.S. District Court for the Middle District of Florida.

The defense requested the jury be instructed that commission of an overt act was necessary for a guilty verdict on the conspiracy to commit money laundering charge. The judge denied the request and they were convicted of various charges including money laundering conspiracy. Whitfield was sentenced to 19-1/2 years in prison; Hall to 15-1/2 years.

One of the issues on appeal was whether the district judge erred by refusing to instruct jurors that an overt act is an essential part of conspiracy to commit money laundering.

An overt act is any action, regardless of its innocence when considered alone, done in furtherance of a conspiracy or a criminal attempt, in this case money laundering. Of the federal circuit courts that have ruled on the money laundering conspiracy statute, five say it requires the commission of an overt act and two say it does not.

Those courts that demand proof of an overt act rely on interpretations of the general conspiracy statute, which requires that "persons do any act to effect the object of the conspiracy."

Those courts that do not require proof of an overt act rely on the similarities between the money laundering conspiracy statute and the drug conspiracy statute, neither of which contain explicit wording regarding an overt act. The money laundering statute requirement reads "any person who conspires to commit any offense," and the drug conspiracy statute applies to "any person who attempts or conspires to commit any offense."

On Nov. 10, 2003, an 11th Circuit Court of Appeals panel sided with the courts with no overt act requirement, upholding the district court’s jury instructions.

"Given the absence of any language in [the statute] requiring proof of an overt act, we find that an overt act is not an essential element for conviction of conspiracy to commit money laundering," Judge Peter Fay wrote.

But the panel said the district court was wrong to increase Hall’s sentence "for abuse of position of due to his status as a pastor."

"When these victims decided to invest their money, theyed this was a legitimate investment program as represented by the directors, including Hall," Fay wrote. "However, this relationship between Hall and his victims is no different than the relationship that exists in every successful fraud."

The case was sent back to the district court for re-sentencing, and Hall was sentenced to 11-1/2 years in prison, a four-year reduction.

Hall and Whitfield petitioned separately to the U.S. Supreme Court regarding for review on the overt act requirement. Their argument relied on, among other things, the lawmakers’ intentions in passing the money laundering conspiracy statute.

"Congress merely intended for [the statute] to increase the maximum penalty for money laundering conspiracies to twenty years," Hall’s petition states. "Congress had no intent to remove the overt act requirement that had always been an element of the crime [under the general federal conspiracy statute]."

But the United States’ reply petition said the justices should instead base their decision on the decade-old Supreme Court decision Shabani v. U.S., in which a unanimous Court found no overt act requirement in the drug conspiracy statute.

"We find it instructive that the general conspiracy statute … contains an explicit requirement that a conspirator ‘do any act to effect the object of the conspiracy,’" Justice Sandra Day O’Connor wrote in Shabani. "In light of this additional element … Congress’ silence in [the drug conspiracy statute] speaks volumes."

"Under the rule of construction set forth in Shabani, the absence of an express overt-act requirement demonstrates that [the money laundering conspiracy statute] incorporates the common law rule that proof of an overt act is not required," the U.S. reply petition reads.

A Supreme Court decision on whether the government needs to prove an overt act is committed for a conviction under the money laundering conspiracy statute would resolve the five-three circuit court split.

On June 21, 2004, the Court accepted review in both cases and consolidated them.

On Jan. 11, 2005, the Court sided unanimously with the government. In writing the Court's opinion, Justice Sandra Day O' Connor referred back to her opinion in Shabini, in which the Court, through her opinion, addressed whether the nearly identical language of the drug conspiracy statute requires proof of an overt act. The Court concluded then, and this time, that it does not.

Concluding that the meaning of the federal money laundering conspiracy statute is plain and unambiguous, O' Connor wrote that an inquiry into its legislative history was unnecessary. "But even were we to do so," she wrote, "we would reach the same conclusion."