United States v. Singh

Rule of Law:

A financial transaction, such as paying for a room rental, constitutes promotion money laundering when it involves the proceeds of a specified unlawful activity and is intended to promote the carrying on of that activity. Proceeds are generated the moment an underlying offense, or a completed phase of an ongoing offense, is finished, and a subsequent transaction using those funds to continue the criminal enterprise is a separate money laundering offense.

Facts:

• From 2000 to 2003, Susan Powell operated a prostitution ring called the 'Gold Club' out of the Economy Inn and Scottish Inn motels in Martinsburg, West Virginia.
• Powell recruited prostitutes from West Virginia and the neighboring states of Maryland and Virginia to work for the Gold Club.
• Powell negotiated an agreement with Surendra 'Sam' Singh, the owner of the Economy Inn, to rent rooms to prostitutes at a discounted rate.
• The agreement was that after a prostitute received cash from her first customer of the day, she would use a portion of it ($40) to pay for the room for the remainder of the day, allowing her to serve more customers.
• If a prostitute had no customers on a given day, Singh waived the room fee.
• In 2001, Powell moved the operation to the Scottish Inn, managed by Dilipkumar 'Dan' Patel and owned by Jalaram, Inc., after Patel agreed to match the Economy Inn's terms.
• Jalaram's President, Suresh Patel, was aware that Powell ran an 'adult entertainment company' and directed her to make the arrangement with Dan Patel.
• After about six months, Powell moved the Gold Club's operations back to the Economy Inn.

Procedural Posture:

• Surendra Singh, Dilipkumar Patel, and Jalaram, Inc. (Defendants) were charged in a superseding indictment in the U.S. District Court for the Northern District of West Virginia (trial court).
• Following a trial, a jury found the Defendants guilty on all fourteen counts, including conspiracy to violate the Mann Act, substantive Mann Act violations, and money laundering offenses.
• The jury also returned a criminal forfeiture verdict against the Defendants.
• On post-trial motions, the district court vacated the Defendants' convictions on the money laundering counts and granted a new trial, ruling that the room rental payments did not involve criminal 'proceeds'.
• The district court also vacated corporate defendant Jalaram's convictions on the Mann Act charges and granted it a new trial due to insufficient evidence of corporate liability.
• The Government moved for reconsideration, after which the district court replaced its new trial order on the money laundering counts with judgments of acquittal for all Defendants.
• The Government appealed the district court's judgments of acquittal and its order granting Jalaram a new trial.
• Singh and Patel cross-appealed their remaining convictions on the Mann Act counts.