Sufficiency of the evidence for a money laundering conviction (18 USC § 1957); “Criminally derived property”; Commingled funds; Sentencing; Procedural & substantive challenges; Failure to address national sentencing disparities; Whether defendant was entitled to a shorter sentence under Amendment 821 of the Sentencing Guidelines

The court held that the government proved beyond a reasonable doubt that defendant-Erker “withdrew more than $10,000 of criminally derived property, rather than his own personal funds,” from a business account he controlled. Thus, it affirmed his money laundering conviction. It also affirmed his sentences but remanded for the district court to consider whether he was entitled to a sentencing reduction based on Amendment 821. He was also convicted of mail fraud, wire fraud, and making a false statement under oath. His convictions arose from his operation of a Ponzi scheme that swindled over 50 people out of nine million dollars. On appeal, he first challenged his money laundering conviction, arguing that because “he put both ‘clean’ and ‘dirty’ funds in the same commingled account, and the government showed only that he made withdrawals from that account, the government didn’t prove that he withdrew ‘criminally derived property’ when he took money out.” The court considered the definition of “criminally derived property,” and held that the statute “clearly criminalizes Erker’s conduct.” In regard to situations where a defendant mixes dirty with clean money, it considered years of precedent involving commingled assets, including trust law. It considered the “lowest intermediate balance test” and the “proceeds first approach.” It noted that the “majority view is that § 1957 doesn’t require any sort of tracing” but it found there were “serious questions surrounding this approach.” On the other hand, it rejected a strict tracing rule. Ultimately, it declined to “decide which background accounting presumption controls” because under the facts here, Erker lost his argument “regardless of whether we apply a proceeds-first or lowest-intermediate-balance rule[.]” For example, the government showed that in one of his accounts, there was “a balance of $143.70 in clean funds, to which Erker added $152,149.62 of dirty funds and then withdrew $17,000. At no point did Erker have sufficient funds to cover this withdrawal—the lowest intermediate balance of clean funds was just $143.70. So Erker couldn’t have withdrawn clean funds. . . . All told, under any acceptable framework—including most circuits’ presumption of ‘dirty funds out first’—Erker’s actions fall within the sweep” of § 1957. As to his sentencing arguments, the court remanded for the district court to consider his claim that his sentence should be shortened under Amendment 821, which eliminated “status points” for those who were on probation or parole at the time of the charged offense. It noted that the “district court need not reduce Erker’s sentence but may do so after considering the § 3553(a) factors.”