[00:00:00] Speaker 07:
So far I'm zero for two and keeping us on track So we're gonna move on to our third to our third case Probably lost all hope of keeping us on track, but we're gonna still try This one is a little bit tougher because you've got people spending so while you're while you're getting seated I'll explain when I have a case like this

[00:00:25] Speaker 07:
I make sure each attorney has a hard stop so that they can't eat up the other attorney's time.

[00:00:35] Speaker 07:
That probably rings hollow given that everybody's gone over so far.

[00:00:38] Speaker 07:
But I'm going to try to hold you to your time.

[00:00:41] Speaker 07:
I did want to make sure on rebuttal time because I really like to not have three different rebuttals.

[00:00:49] Speaker 07:
Is there any what's going on with that?

[00:00:51] Speaker 03:
Well, Your Honor, let me tell you how we've divided it up, and I'm afraid we've sort of each got sort of areas, so we probably do need some separate rebuttal time.

[00:01:00] Speaker 03:
But what I'm going to be taking... Reserve it.

[00:01:03] Speaker 03:
I'm going to reserve it.

[00:01:04] Speaker 03:
I have it right here in my notes, Your Honor.

[00:01:06] Speaker 07:
If you actually have time left on your clock.

[00:01:07] Speaker 03:
My attitude is, Your Honors, take as much time as you want, of course.

[00:01:11] Speaker 07:
So you do want to have each one of you have...

[00:01:14] Speaker 07:
rebuttal time.

[00:01:15] Speaker 07:
All right.

[00:01:15] Speaker 03:
Maybe I cannot be more specific, your honor.

[00:01:18] Speaker 03:
What I'm going to address the insufficiency of evidence and deliberate ignorance issues.

[00:01:22] Speaker 03:
I'm Carl Gunn.

[00:01:23] Speaker 03:
I'm representing Mr. By, um, and I may address some of the individual Mr. By issues to the extent there's time.

[00:01:30] Speaker 03:
Uh, Ms.

[00:01:30] Speaker 03:
Chen is going to take five minutes and address the sentencing issues, which she was the briefer on, but I joined in, all of us joined in and Mr. Pope wants to use five minutes to address severance issues.

[00:01:43] Speaker 03:
I'm going to reserve my 10 minutes, two minutes for rebuttal.

[00:01:46] Speaker 07:
I'm going to try to salvage something here and try to hold you to that.

[00:01:51] Speaker 07:
If my colleagues have questions, please take as much time as you want.

[00:01:56] Speaker 07:
There's no guarantee you will get rebuttal time.

[00:01:59] Speaker 03:
All right.

[00:01:59] Speaker 03:
I will watch for my time.

[00:02:01] Speaker 03:
I see 10 minutes here, and I'll try to watch when it gets to the two.

[00:02:04] Speaker 07:
We'll go ahead and start now.

[00:02:06] Speaker 07:
Each council, please state your names for the record when you come up so we know.

[00:02:09] Speaker 03:
All right.

[00:02:09] Speaker 03:
And as I said, I'm Carl Gunn.

[00:02:11] Speaker 03:
I'm representing Mr. By.

[00:02:12] Speaker 03:
And to get to the, you know, the first issue, Your Honor, is the insufficiency of the evidence, specifically the insufficient evidence of a concealment purpose.

[00:02:22] Speaker 03:
What really happened here, I would submit, is the government charged the wrong crime.

[00:02:27] Speaker 03:
There are two possibly correct ways of looking at Mr. Bai's, Mr. Hu's, and Mr. Xi's conduct.

[00:02:33] Speaker 03:
One is that it was the completion of the fraud, because the whole purpose of the fraud wasn't to get these amorphous gift card numbers,

[00:02:39] Speaker 03:
It was to get money, and what they did was getting money from the fraud.

[00:02:43] Speaker 03:
The other way of looking at it is it was them buying stolen property.

[00:02:47] Speaker 03:
The people who got the fraudulent numbers wanted to sell them.

[00:02:50] Speaker 03:
They found Mr. By, Mr. Hu, and Mr. Xi, and they sold them to Mr. Hu and Mr. Xi, and that transaction was done.

[00:02:55] Speaker 02:
That's where the government's story begins, right?

[00:02:57] Speaker 02:
I'm sorry?

[00:02:58] Speaker 02:
That's where the government's story begins, because

[00:03:01] Speaker 02:
I didn't see any evidence in the record of actual participation in the underlying fraud.

[00:03:07] Speaker 02:
Correct.

[00:03:07] Speaker 02:
I mean, we've all gotten these phone calls saying you've got an outstanding warrant come down and give us gift cards and the warrant will go away.

[00:03:14] Speaker 02:
I've often wondered why it is they insist on gift cards.

[00:03:17] Speaker 02:
I guess now I know.

[00:03:18] Speaker 03:
And I got one recently and I gave them a lecture about it getting into some trouble.

[00:03:22] Speaker 02:
There's no evidence that your client was involved in that.

[00:03:24] Speaker 03:
But I think that's exactly correct.

[00:03:26] Speaker 03:
Or if the government wanted to try to prove it, they could.

[00:03:29] Speaker 03:
They could charge him with conspiracy to wire fraud or mail fraud or accessory after the fact.

[00:03:34] Speaker 03:
If they want to try to prove that, great.

[00:03:37] Speaker 03:
If they want to try to prove receiving stolen property either in federal court or state court, let them try.

[00:03:41] Speaker 03:
But this isn't money laundering.

[00:03:43] Speaker 03:
You have case law that has expressed real concern about expanding the breadth of this money laundering statute.

[00:03:51] Speaker 03:
It's not a common law type of crime.

[00:03:53] Speaker 03:
It's this crime that's been created

[00:03:55] Speaker 03:
and the courts have expressed real concern the supreme court and the lower courts about this not being just a mere spending statute and you have to ask yourself i know i don't get asked the questions but this is a rhetorical question you have to ask yourself what else so that could they have done to get the money they had to do something with the gift cards that wasn't they didn't just want a bunch of gift card numbers does the racing you know that that the fact that you've got to do this quickly before we've you get uh... before

[00:04:24] Speaker 07:
cancels the gift cards.

[00:04:26] Speaker 07:
Does that indicate anything with regard to the laundering aspect?

[00:04:29] Speaker 03:
No, it doesn't anything.

[00:04:30] Speaker 03:
I think that's part and parcel of showing that that if anything shows more that their real purpose was just to get the money.

[00:04:38] Speaker 03:
It seems to me it doesn't show laundering.

[00:04:40] Speaker 07:
What about the fact that they would go and sometimes they would get other cards so they would go.

[00:04:46] Speaker 07:
So that sounds like laundering and it sounds like you're taking

[00:04:52] Speaker 07:
something that's, you know, and you're turning it into something else that may not get caught.

[00:04:56] Speaker 03:
First of all, that wasn't what they usually did.

[00:04:59] Speaker 03:
If you look at the government's opening statement, which they quoted 38 of their brief, they say usually they bought electronic merchandise.

[00:05:09] Speaker 03:
This idea of getting separate cards or buying a small thing and getting another card, that was basically a backup way to sort of keep things frozen so they could get the money later.

[00:05:19] Speaker 03:
Look, if you'd look, I'd like to refer you, if I could, to several quotes of Mr. Bayh's statements in the chats at page 20 of my brief.

[00:05:29] Speaker 03:
This is what he said.

[00:05:30] Speaker 03:
If what you bought is not what I wanted, you can get a refund back.

[00:05:35] Speaker 03:
If you have 300 or 500 balance, you can buy things and return them.

[00:05:40] Speaker 03:
If they cannot be cleared,

[00:05:42] Speaker 03:
than just buy and make them physical cars.

[00:05:44] Speaker 03:
That was clearly a backup way of making sure they got the money.

[00:05:49] Speaker 03:
It may have had a slight effect of concealment, though it didn't, because if you read the target employee's testimony, they're able to trace them anyway.

[00:05:57] Speaker 02:
You wouldn't dispute that if I go in and buy a candy bar with a $500 stolen gift card and I'm handed back a new gift card with 496 balance remaining after my candy bar is paid for, that that is now a clean card.

[00:06:15] Speaker 02:
That's the laundry.

[00:06:17] Speaker 03:
Well, actually, the target employee testimony says you can still trace to that card very easily.

[00:06:23] Speaker 03:
But second, your honor, it's that's what the defendant thought he was doing.

[00:06:26] Speaker 02:
It was he was getting a clean card.

[00:06:30] Speaker 03:
But you have to look at his purpose, not the effect, but the purpose.

[00:06:34] Speaker 03:
And the purpose here of getting that clean card was only so he could get the money the next day or buy electronics the next day and sell them to get the money.

[00:06:43] Speaker 02:
Couldn't the jury conclude that his intent in doing that was to get a brand new card number which had not been reported?

[00:06:52] Speaker 03:
I don't think on this record the jury could have found that beyond a reasonable doubt, Your Honor.

[00:06:57] Speaker 03:
It is crystal clear, I think, from the record in this case that what they were trying to do was get the money that the gift card numbers represented.

[00:07:04] Speaker 03:
And that was a backup way of doing it if they couldn't buy the right merchandise quickly enough.

[00:07:11] Speaker 03:
I really think that's the only and best fair reading of this case.

[00:07:15] Speaker 03:
Compare some of the cases that are out there.

[00:07:17] Speaker 03:
Compare the cases to government sites.

[00:07:20] Speaker 03:
Compare the same case, the government sites.

[00:07:23] Speaker 03:
You know, the cases talk about having direct evidence of intent to conceal or purpose of concealment.

[00:07:28] Speaker 03:
They talk about having

[00:07:30] Speaker 03:
complex transactions.

[00:07:32] Speaker 03:
In the same case, you had, one, a private Huala system with confidentiality and intricate pickup and delivery procedures, coded words and burner phones, serial number verification systems.

[00:07:44] Speaker 07:
I'm still struggling with the fact that if I'm coming in with a big gift card, you know, what I would consider a big gift, $500, and I buy something small and get an, you know, normally you would not, you just keep the rest of your balance on that gift card, but I put it on a different gift card,

[00:07:59] Speaker 07:
How is that not to conceal?

[00:08:01] Speaker 07:
I mean, the only rational reason I can think to do that would be to conceal the source of the funds, which seems to fall within.

[00:08:07] Speaker 07:
Now, you're saying, yeah, but they're ultimately doing it so they can come in to and the card they bring back will not be canceled by target, but it's still to conceal.

[00:08:20] Speaker 03:
It's a quick backstop, though, and you have to look at the purpose.

[00:08:23] Speaker 03:
What is their purpose?

[00:08:25] Speaker 03:
The purpose is not to conceal money here.

[00:08:27] Speaker 03:
The purpose is not like your classic business money laundering.

[00:08:30] Speaker 07:
Well, it is to conceal, but then you're saying the ultimate purpose is to actually get the money.

[00:08:34] Speaker 07:
But isn't that true of all laundering?

[00:08:36] Speaker 07:
Like all laundering, you're trying to make sure that the IRS doesn't know or something so you don't lose the money.

[00:08:42] Speaker 03:
But sometimes you have money already and you're processing it through three or four different banks.

[00:08:47] Speaker 03:
So they don't know where the money came from.

[00:08:50] Speaker 07:
It seems to me your argument seems to reduce to

[00:08:55] Speaker 07:
No, their ultimate purpose was they just wanted the money, and they did these concealing things to make sure that the money wouldn't disappear on them, but that's kind of always the case with laundering.

[00:09:05] Speaker 03:
Right.

[00:09:06] Speaker 07:
Well, it's not always the case with laundering, because with laundering, where you go through three or... The reason you're always laundering is because you're worried if you don't launder the money, it will disappear.

[00:09:14] Speaker 07:
The government will take it or something, right?

[00:09:17] Speaker 03:
No, you don't want it identified as stolen money.

[00:09:21] Speaker 03:
Because why?

[00:09:22] Speaker 03:
Why do you care if it's stolen money?

[00:09:24] Speaker 03:
Because you don't want the government to charge you with a crime and put you in prison.

[00:09:27] Speaker 03:
And take your money away.

[00:09:28] Speaker 03:
No, it's not really take the money away.

[00:09:30] Speaker 03:
It's also put you in prison and find out you committed a crime.

[00:09:32] Speaker 02:
But why isn't the money the proceeds of specified unlawful activity?

[00:09:36] Speaker 03:
We're not arguing on this issue.

[00:09:38] Speaker 03:
We're not arguing it's not the proceeds of specified unlawful activity.

[00:09:42] Speaker 03:
So it's dirty money coming in.

[00:09:44] Speaker 03:
But it's not the purpose of the transaction.

[00:09:48] Speaker 03:
You need a transact.

[00:09:49] Speaker 03:
There's three elements.

[00:09:50] Speaker 03:
You need the transact.

[00:09:51] Speaker 03:
You need the dirty money.

[00:09:52] Speaker 03:
Yeah.

[00:09:53] Speaker 03:
You need a transaction with the dirty money.

[00:09:55] Speaker 02:
Which is either to acquire the electronic merchandise or to get a clean gift card.

[00:09:59] Speaker 03:
Right.

[00:10:00] Speaker 03:
And you need the purpose of that transaction to be concealed rather than just get the money.

[00:10:06] Speaker 03:
And that's the problem here.

[00:10:08] Speaker 03:
First of all, everything you're asking me about would only apply to the transactions where they got gift cards as opposed to buying merchandise.

[00:10:15] Speaker 03:
Clearly, buying the merchandise is not money laundering.

[00:10:18] Speaker 03:
And when you have this context and these sorts of factual evidence.

[00:10:23] Speaker 02:
But if I receive stolen money and I use it to buy a good and then I turn around and resell that good.

[00:10:33] Speaker 03:
I'm sorry, what was your first statement in here?

[00:10:35] Speaker 02:
If you get what?

[00:10:36] Speaker 02:
If I get stolen credit card numbers or credit cards, and I use the card to buy a good electronic item, and I resell that electronic item for cash, why isn't that money laundering?

[00:10:54] Speaker 03:
Because the, well, first of all, one of the cases I cite, the Oliaki Okay case, and I'm horribly pronouncing that name,

[00:11:01] Speaker 03:
is exactly that cases have to happen to keep the computer and use instead of reselling it yeah but if you're i mean the whole purpose of this fraud is not for them to get a bunch do you know fifty computers is to get the money on the gift cards the only the only way to carson are getting it in a different the only way to get money on the gift cards is to buy a computer because you can't buy money with the gift card you buy a computer and then to get the money you gotta sell the computer

[00:11:26] Speaker 03:
These, in the words of the McGeehee case that I cite in brief, is part and parcel of the fraud.

[00:11:32] Speaker 02:
The goal of the fraud is to get money, not gift card numbers or computers.

[00:11:42] Speaker 03:
maybe depending on his purpose for buying the Canadian currency, it might... To avoid tracing the stolen, the money that was the proceeds of the fraud.

[00:11:50] Speaker 02:
Or if it's a Canadian citizen who lives in Canada and has to use Canadian money, it might be just so he can spend the... I assume that the money that was sent back to Magic Lamp was communicated somehow electronically, wire transfers, or did they actually have couriers who... They paid Magic Lamp, I believe, with Chinese currency and bank transfers.

[00:12:10] Speaker 02:
So they did convert it to a foreign currency.

[00:12:13] Speaker 03:
Well, they sold the merchandise and deposited it in their bank accounts and then paid.

[00:12:21] Speaker 03:
But that was not the... Paid in WAN?

[00:12:24] Speaker 03:
I think that, yes.

[00:12:26] Speaker 03:
But that was not the... Isn't that a classic money laundering?

[00:12:29] Speaker 03:
But that was not the money laundering that was charged.

[00:12:32] Speaker 03:
They weren't charging money.

[00:12:33] Speaker 03:
Was there evidence?

[00:12:35] Speaker 03:
That was just paying Magic Lamp for the stolen gift cards.

[00:12:38] Speaker 02:
With now clean money.

[00:12:41] Speaker 03:
Well, with the only money that Magic Lamp

[00:12:43] Speaker 03:
could get.

[00:12:44] Speaker 03:
That was the only way Magic Lamp was going to get money.

[00:12:48] Speaker 07:
Well, they could have sent them some Target gift cards.

[00:12:51] Speaker 03:
No, they couldn't have, because they didn't want the Target.

[00:12:54] Speaker 03:
They wanted money.

[00:12:55] Speaker 03:
The whole purpose of the fraud was to get money.

[00:12:57] Speaker 07:
We're taking you over, and I'm going to try to move.

[00:13:01] Speaker 07:
I'll make sure and give you a minute for rebuttal time, and we'll move on to your co-counsel.

[00:13:09] Speaker 07:
All right.

[00:13:10] Speaker 07:
I think the government

[00:13:12] Speaker 03:
Okay.

[00:13:13] Speaker 03:
I think one of the other council is going to address their issue.

[00:13:16] Speaker 03:
Sounds good.

[00:13:16] Speaker 03:
Thank you.

[00:13:23] Speaker 01:
Yes, I think the plan will be, I'll address severance on behalf of Mr. Shee and Mr. Hu.

[00:13:27] Speaker 01:
And then my colleague, Ms.

[00:13:29] Speaker 01:
Chen will address the sentencing issues.

[00:13:31] Speaker 01:
Good morning, Miles Pope for Tyron Shee.

[00:13:34] Speaker 01:
And I'll be addressing, as I just said, the severance issue on behalf of Mr. Hu and Mr. Shee.

[00:13:38] Speaker 01:
I will try to reserve one minute, which may become 30 seconds, for rebuttal.

[00:13:43] Speaker 01:
The district court's failure to grant severance in this case meant that the jury heard highly prejudicial evidence that went to the heart of the most hotly contested issue in the trial, Mr. Hu and Mr. Xi's mental state, their awareness that the gift cards had been fraudulently obtained.

[00:14:00] Speaker 01:
The government's brief does not seriously contest the prejudicial nature of this evidence,

[00:14:05] Speaker 01:
Instead, the government essentially makes two arguments in defense of severance denial.

[00:14:09] Speaker 01:
The first argument is that Mr. Bayh's mental state evidence would have been admissible even at a severed trial.

[00:14:16] Speaker 01:
And the second is that the court's limiting instruction cured any prejudice.

[00:14:20] Speaker 01:
Both of these arguments fail.

[00:14:22] Speaker 01:
With respect to the admissibility argument, that runs aground on the district court's own ruling in this case, the ruling that undergirded the limiting instruction it gave.

[00:14:30] Speaker 02:
why is this any different from any 371 conspiracy where there are more heavily involved co-conspirators and lesser involved conspirators the Pinkerton rules apply if the jury finds that the activities were in furtherance of the conspiracy that the defendant knowingly joined he's liable under Pinkerton for all of the

[00:14:54] Speaker 02:
violations that reasonably flow from that type of a conspiracy.

[00:14:59] Speaker 01:
Well, two responses to that.

[00:15:02] Speaker 01:
The first is, again, we have the district court's own conclusion that the evidence that was

[00:15:11] Speaker 01:
against the Bayh mental state evidence was not admissible and could not be used.

[00:15:15] Speaker 02:
And the jury was sold.

[00:15:17] Speaker 02:
Don't consider this evidence with regard to the other two defendants.

[00:15:20] Speaker 02:
This pertains only to the actions of Mr. Bayh.

[00:15:27] Speaker 01:
Perhaps I'm syncing up with you now.

[00:15:29] Speaker 01:
That goes to the issue of the adequacy of the instruction.

[00:15:33] Speaker 01:
I think the adequacy of that limiting instruction, whether that limiting instruction was enough to... That's a pretty standard instruction.

[00:15:40] Speaker 02:
And then the jury was again reminded during the final set of closing instructions that they were to separately consider the evidence as to each defendant and that their determination of guilt or innocence on one count as to one defendant should not influence their determination of the evidence as it pertained to the other two.

[00:15:58] Speaker 01:
Well, a few issues that I see with that limiting instruction.

[00:16:02] Speaker 01:
The first was, as the briefings articulated, the timing at which it was given.

[00:16:09] Speaker 01:
So a limiting instruction, especially as it pertains to exhibits 178 and 181, which were particularly damaging exhibits, was given Friday afternoon before they were testified to.

[00:16:19] Speaker 01:
And then the jury, you know, at the very end, they're not testified to at the time the limiting instruction is given.

[00:16:25] Speaker 01:
The jury comes back on Monday.

[00:16:27] Speaker 01:
And the court turns to the witness who's going to testify, not the jury, and basically reminds the witness, this is under a limiting instruction, but that's not relevant to the witness.

[00:16:35] Speaker 01:
The witness is going to testify to it.

[00:16:36] Speaker 01:
It's the jury that needs to be reminded of that.

[00:16:38] Speaker 01:
So the timing is problematic.

[00:16:40] Speaker 01:
There are multiple.

[00:16:42] Speaker 02:
But your argument would basically ask us to disregard Ninth Circuit authority that says that we presume that the jury follows the limiting instruction that the court gives.

[00:16:51] Speaker 02:
And the jury was told at least twice, once when the evidence was presented,

[00:16:56] Speaker 02:
and once during closing jury instructions.

[00:16:59] Speaker 02:
And also as I recall,

[00:17:01] Speaker 02:
by the prosecutor during closing argument that this evidence pertains only to Mr. Bai.

[00:17:07] Speaker 02:
So where's the error here?

[00:17:09] Speaker 01:
So first of all, we're not attacking the adequacy.

[00:17:14] Speaker 01:
We're not attacking the instruction directly.

[00:17:16] Speaker 01:
We're not saying the instruction itself was error to be given.

[00:17:18] Speaker 01:
What we're saying is that given the sort of inherently prejudicial nature of this evidence in a rimless hub and spoke conspiracy where you're getting.

[00:17:25] Speaker 02:
But you really are challenging the Ninth Circuit presumption that the jury

[00:17:30] Speaker 02:
listened to and followed the limiting instruction that it was given.

[00:17:36] Speaker 01:
No, I resist that.

[00:17:38] Speaker 01:
I'm not challenging the presumption.

[00:17:40] Speaker 02:
You're arguing that they forgot about it over the weekend.

[00:17:43] Speaker 02:
And so the court should have reminded them again on Monday when the witness got on the witness.

[00:17:46] Speaker 01:
The presumption can be overcome.

[00:17:48] Speaker 01:
And what I'm trying to point to with respect to that example, there's a list of other issues with sort of the specifics of this case is that in this case,

[00:17:57] Speaker 01:
that presumption was overcome.

[00:17:59] Speaker 01:
So one of the other key points, just to jump to sort of the crux, is the prosecutor's closing argument itself invited the jury to look back.

[00:18:08] Speaker 01:
The prosecutor began with these exhibits that were inadmissible against Mr. Xi.

[00:18:13] Speaker 01:
and Mr. Hu and discuss them at great length.

[00:18:16] Speaker 01:
That was the opening line of the closing statement.

[00:18:20] Speaker 01:
Then it goes on both with respect to Mr. Hu and with respect to Mr. Xi.

[00:18:24] Speaker 01:
It calls back to that evidence.

[00:18:26] Speaker 01:
It does say at one point before discussing Mr. Xi that each defendant should be considered separately.

[00:18:35] Speaker 02:
This is what the jury instruction told me.

[00:18:36] Speaker 01:
Well, the jury instruction says, more specifically, you cannot consider certain evidence against the defendant.

[00:18:41] Speaker 01:
They don't repeat that.

[00:18:42] Speaker 02:
The prosecutor said, now I'm going to turn to the evidence with regard to who and she did it.

[00:18:47] Speaker 01:
But in both the who argue, well, I guess in the by arguments, they reference Mr. Who, and they blend the evidence and refer back to the inadmissible exhibits, refer to the inadmissible exhibits, and say, look, this conversation that Mr. By had that was inadmissible,

[00:19:03] Speaker 01:
just like what he told Mr. Who.

[00:19:05] Speaker 02:
And then, in the she context, it says... Well, there was evidence of that Who raised a concern.

[00:19:11] Speaker 02:
Was there not early on in his joining of the conspiracy?

[00:19:15] Speaker 02:
I forget exactly what he said, but it was basically, is this legitimate?

[00:19:19] Speaker 02:
That's how I interpret it.

[00:19:20] Speaker 01:
Yes, absolutely.

[00:19:23] Speaker 02:
Of course, there were certain WeChat messages that were admissible against Mr. Goodwin.

[00:19:37] Speaker 02:
behavior and that target stores were under police surveillance and people were being arrested by, was it Fontana, police department that arrested some people for passing these stolen target cards?

[00:19:49] Speaker 01:
So you're absolutely correct.

[00:19:52] Speaker 01:
The government introduced certain WeChat messages that related, you know, with focusing.

[00:19:58] Speaker 02:
There was a search warrant executed by Fontana and a copy of the search warrant was given to

[00:20:04] Speaker 02:
Mr. Bye, I guess it was, who then repeated to who and she the police were conducting a raid.

[00:20:14] Speaker 01:
The issue is not sort of the bare legal sufficiency of the evidence as it pertains to she and who.

[00:20:21] Speaker 01:
The issue is that if you actually look at the WeChat messages that specifically reference fraud, use the word fraud.

[00:20:29] Speaker 02:
Doesn't that all go to intent?

[00:20:30] Speaker 02:
I guess what I'm having a hard time with your argument is it seems that there is

[00:20:34] Speaker 02:
evidence in the record that the jury could properly consider to find that who and she had the requisite intent here, irrespective of the evidence relating to Mr. Vai's post-arrest conduct for which he was charged and convicted in count two.

[00:20:52] Speaker 01:
That evidence, in my view, was not overwhelming.

[00:20:56] Speaker 02:
But it's not a question of overwhelming.

[00:20:58] Speaker 02:
It's a question under the Virginia case as to whether or not a reasonable jury

[00:21:03] Speaker 02:
it sufficiently support a reasonable jury's conclusion of guilt beyond a reasonable doubt.

[00:21:10] Speaker 01:
So the issue with respect, the issue again is not, and I apologize for misunderstanding the question, but I'm not challenging again the bare legal sufficiency here.

[00:21:18] Speaker 01:
What I'm arguing is that the failure to sever the case and the fact that the jury heard all of this other evidence about Mr. Bai's communications that otherwise wouldn't have been admissible

[00:21:30] Speaker 02:
It goes back to my original question of how is this different from any other 371 conspiracy?

[00:21:35] Speaker 02:
I mean, this is an argument that's made all the time.

[00:21:38] Speaker 08:
Counsel, can you give me your best case to justify severance?

[00:21:41] Speaker 08:
Give me your best shot.

[00:21:43] Speaker 01:
I mean, I think it's the Supreme Court's Kodiakos case fundamentally is the best case in support of severance here, which is where the Supreme Court specifically calls out that in this particular context of a rimless hub and spoke conspiracy, you have a particularly heightened risk that the jury will blend mental state evidence and do guilt transference from a conspiracy that is not admissible

[00:22:12] Speaker 01:
to the conspiracy that was charged.

[00:22:14] Speaker 07:
All right, Council, I've done a terrible job of managing the clock once again, but I'll give you a minute for rebuttal time.

[00:22:21] Speaker 01:
That's a windfall, thank you.

[00:22:23] Speaker 07:
And Ms.

[00:22:25] Speaker 07:
Chen, my credibility is shot at this point, but I'm going to try to hold you to five minutes.

[00:22:29] Speaker 07:
Oh no, don't start with me.

[00:22:37] Speaker 05:
You make me talk faster if you start with me, so.

[00:22:40] Speaker 05:
May it please the court, Davina Chen, on behalf of Bowen Hu.

[00:22:43] Speaker 05:
I'm going to argue the sentencing issues as to all of the defendants, but I'd like to focus today on the two-level enhancement under 2S1.1B3, which the court imposed on top of the four-level enhancement under 2S1.1B2C.

[00:23:00] Speaker 05:
So the imposition of that two-level enhancement was error for two independent reasons.

[00:23:06] Speaker 05:
first, the enhancement applies only if subsection B to B applied and subsection B to B did not apply in this case.

[00:23:16] Speaker 05:
Second, the enhancement applies only if the offense involves sophisticated laundering and it did not.

[00:23:25] Speaker 07:
So I know the first of those two because that's focus on the first of those two things.

[00:23:32] Speaker 07:
That's OK.

[00:23:34] Speaker 05:
B2B has to have applied for yes B2B has to apply and Does say that so yes it says that B2B has to apply and B2A B and C are in the alternative and you can only apply one of them and in this case B2C applied and since B2C applied B2B did not apply and therefore B3 could not apply council before we get too deep into this why aren't we

[00:24:00] Speaker 08:
on plain error review here.

[00:24:03] Speaker 08:
You didn't make this argument before the district court, correct?

[00:24:06] Speaker 05:
All the parties did object to the enhancement under B3.

[00:24:10] Speaker 05:
And under Ninth Circuit precedent, it's clear that it's claims that can be forfeited, not arguments.

[00:24:15] Speaker 05:
And so they made the claim below that B3 should not apply.

[00:24:20] Speaker 05:
And this is an additional argument that I'm presenting on appeal with respect to why B3 doesn't apply.

[00:24:27] Speaker 05:
Even if plain error were to apply, the language is plain.

[00:24:31] Speaker 05:
It says that B3 only applies if B2B applies, and in this case B2B doesn't apply.

[00:24:38] Speaker 05:
The government's argument is that it could apply without applying.

[00:24:43] Speaker 05:
And they cite nothing in support of that.

[00:24:46] Speaker 05:
And it's basically not the way the guidelines operate.

[00:24:49] Speaker 05:
You apply something and then, you know, you do it in order.

[00:24:52] Speaker 05:
So first you determine which of the B2s apply.

[00:24:55] Speaker 05:
And when you're done with that, you do B3.

[00:24:58] Speaker 05:
And at that point, B2 didn't apply anymore.

[00:25:01] Speaker 05:
B2B didn't apply anymore because B2C had applied.

[00:25:05] Speaker 08:
Council, do you have the guidelines?

[00:25:07] Speaker 08:
I do.

[00:25:08] Speaker 08:
Can we go to another guideline?

[00:25:10] Speaker 08:
You talked about that's not how the guidelines work.

[00:25:13] Speaker 08:
so section 3a 1.2 3a 1.2 yes okay that's with apply the greatest 3a 1.2 then a says if one the victim was a government officer B or C and then it has and to the offense of conviction was motivated by status increased by three levels

[00:25:39] Speaker 08:
Subprovision B then says, if subsection A1 and A2 apply, an applicable chapter two guideline is from chapter two, increase by six levels.

[00:25:51] Speaker 08:
So how do you read that?

[00:25:52] Speaker 08:
Doesn't provision B suggest that subsection A and one can apply, even if you're not increasing the base level offense?

[00:26:02] Speaker 05:
Well, under 3A1.2A, you are increasing the base level offense level by three.

[00:26:09] Speaker 08:
So you're saying how this operates, 3A1.2, a defendant can be increased by three levels, and then B could apply, the defendant can be increased by another six levels?

[00:26:21] Speaker 05:
No.

[00:26:22] Speaker 05:
I'm saying that it is that you apply the greatest.

[00:26:24] Speaker 08:
So you disregard A once you get to B. But how do you get to B if, how would B ever be triggered if I'm disregarding A?

[00:26:34] Speaker 08:
Because B says if subsection A1 and A2

[00:26:38] Speaker 08:
apply doesn't that suggest that apply in this context means is applicable?

[00:26:45] Speaker 05:
You know, I haven't looked at this before.

[00:26:46] Speaker 05:
The government hasn't brought it to my attention before and so I would be happy to look at it more carefully and submit the court with with briefing.

[00:26:54] Speaker 05:
But I think that what is important to notice here is that the the intent of this guideline is quite clear that the six levels

[00:27:05] Speaker 07:
Applies only you know if it's the greatest and the intent is also quite clear with respect to 2s 1.1 I mean the Commission the other did I think you know I the first time I'm hearing about is I'm looking over my colleague shoulder over here that but I think If this was like that yes, then you would either apply

[00:27:28] Speaker 07:
B2B and put 2 or you would apply 3 and put 2 and the 2 and 3 would just knock out the 2 and B2.

[00:27:35] Speaker 07:
But that's not what they're trying to do, right?

[00:27:36] Speaker 07:
They're trying to stack them on here.

[00:27:39] Speaker 05:
What I'm saying is that they're not trying to stack them, right?

[00:27:42] Speaker 07:
No, but I'm saying the governments.

[00:27:44] Speaker 05:
Yes, exactly.

[00:27:44] Speaker 07:
The government's position is that they stack here, but the other one, they don't stack.

[00:27:49] Speaker 07:
It's clearly one replaces the other.

[00:27:52] Speaker 07:
So I'm not sure that this would be the same as that other example because this is not

[00:27:58] Speaker 07:
This is not an attempt to stack, which I think it's clear that the other one's meant to stack, whereas this one, I mean, the other one is to replace.

[00:28:05] Speaker 07:
You either do three or you do six, the greater of.

[00:28:09] Speaker 07:
And then in this one, you...

[00:28:11] Speaker 07:
You would do two or two if you approached it the same way.

[00:28:13] Speaker 05:
It could be two and two, which would be four.

[00:28:16] Speaker 05:
And I think this is really significant.

[00:28:17] Speaker 05:
I mean, when I was preparing for argument, I broke down 2S1.1 a little bit so that I could understand it.

[00:28:23] Speaker 05:
And we have to remember that 2S1.1 is a really complicated guideline because it covers two different kinds of laundering, 1956 and 1957, and two different types of launderers.

[00:28:35] Speaker 05:
So it covers direct launderers and third party launderers.

[00:28:40] Speaker 05:
And it's very careful in terms of its proportionality.

[00:28:44] Speaker 05:
Um, it sets base offense levels with respect to, uh, I see that I'm running out of time, but I'm hoping that you'll let me at least finish this point.

[00:28:51] Speaker ?:
Okay.

[00:28:52] Speaker 07:
Tell me what my clerk told me.

[00:28:54] Speaker 07:
Um, so keep going.

[00:28:55] Speaker 05:
Okay.

[00:28:55] Speaker 05:
So that, okay.

[00:28:56] Speaker 05:
So that it's, it's clear that, uh, if you read the reason for the amendment, um, they're trying to set things proportional to the, to the underlying offense.

[00:29:05] Speaker 05:
So a one,

[00:29:06] Speaker 05:
It's for direct money launderers and it sets it relation to the underlying offense.

[00:29:11] Speaker 05:
A2 is for third party launderers and it adds for loss.

[00:29:15] Speaker 05:
But then there's another provision plus six that only applies to third party money launderers.

[00:29:20] Speaker 05:
So these first parts, A12 and B1 are all about what is the underlying conduct.

[00:29:27] Speaker 05:
And then we have these other provisions that are about what is the laundering conduct.

[00:29:32] Speaker 05:
And 2A and 2B,

[00:29:35] Speaker 05:
apply to direct launderers and third-party launderers equally.

[00:29:40] Speaker 02:
Okay?

[00:29:42] Speaker 05:
I'm getting to the key point.

[00:29:43] Speaker 05:
I know it's like a huge setup, Judge Tom.

[00:29:46] Speaker 05:
Can I get to my key point?

[00:29:48] Speaker 05:
Yes, absolutely.

[00:29:49] Speaker 05:
Okay, so then for the direct laundry, you skip over C. C cannot apply to the direct laundry.

[00:29:56] Speaker 05:
You go all the way to three.

[00:29:58] Speaker 05:
So the direct laundry can get plus four if they get the two under 2B and the three.

[00:30:04] Speaker 05:
That's the most they can get is plus four.

[00:30:06] Speaker 05:
The third party launderer also can at most get plus four because they go to C and the commission hasn't bothered even requiring that they be sophisticated for them to get the plus four.

[00:30:18] Speaker 05:
The commission is giving them the plus four for being in the business.

[00:30:21] Speaker 05:
But there's no indication that they also would get a plus two on top of the plus four.

[00:30:26] Speaker 05:
The plus four is the ceiling.

[00:30:28] Speaker 02:
Isn't the government's position that they were in essence in the business of laundering funds

[00:30:34] Speaker 02:
Because there was no evidence that they actually participated in the underlying fraud that produced the stolen cards and numbers to begin with.

[00:30:42] Speaker 05:
Yes.

[00:30:42] Speaker 05:
Yeah.

[00:30:42] Speaker 05:
So that's why they get the plus four.

[00:30:44] Speaker 02:
Okay.

[00:30:45] Speaker 05:
But they don't get the plus two on top of the plus four.

[00:30:48] Speaker 02:
We'll see what they have to say if that's correct.

[00:30:51] Speaker 07:
All right.

[00:30:52] Speaker 07:
I think I'm going to cut you off at eight minutes and give you another minute for a bottle just like everybody else.

[00:30:58] Speaker 05:
Thank you, your honor.

[00:30:59] Speaker 07:
Thank you.

[00:31:01] Speaker 07:
And since we're going to hold the government to a higher standard in 20 minutes, if possible.

[00:31:06] Speaker 07:
20 sounds like a long time, so.

[00:31:24] Speaker 07:
You may proceed.

[00:31:24] Speaker 04:
Good morning, Your Honors.

[00:31:25] Speaker 04:
And may it please the Court, Meredith Healy, for the government.

[00:31:28] Speaker 04:
I also represented the government at the trial in this matter.

[00:31:32] Speaker 04:
There are a number of issues raised across these three appeals.

[00:31:34] Speaker 04:
I'm going to focus on the issues that we discussed, that we've been discussing so far.

[00:31:40] Speaker 04:
And the first of those issues is the issue of the sufficiency of the evidence as to the purpose... Why don't you start with the sentencing enhancement?

[00:31:46] Speaker 02:
That would be most helpful to me.

[00:31:48] Speaker 04:
Absolutely, Your Honor.

[00:31:49] Speaker 04:
I'm happy to do that.

[00:31:50] Speaker 04:
Okay.

[00:31:52] Speaker 04:
The question of which standard here applies specifically to the sophisticated laundering issue.

[00:31:59] Speaker 04:
It is plain error.

[00:32:01] Speaker 04:
And the reason for that is because there was not an objection made as to the legal interpretation of this specific provision before the lower court.

[00:32:11] Speaker 04:
The only objection that was made before the lower court was whether there was sufficient factual evidence.

[00:32:18] Speaker 07:
So I understand, I mean, that argument makes

[00:32:20] Speaker 07:
a certain amount of sense because it seems a little unfair to if the lower court's never told what we're being told to to say the lower court erred by not concluding.

[00:32:29] Speaker 07:
The problem is the Ninth Circuit's arguments versus claims that you can't waive arguments, you can just waive claims and they did seem to have challenged the sophisticated laundering enhancement generally so

[00:32:47] Speaker 04:
I understand, Your Honor, that there's been discussion of that in Curielick, I believe, where they say that claims are, it is claims that are waived, arguments that are preserved.

[00:32:57] Speaker 04:
But then you have this court's 2024 decision in Hackett, where the defendant in that case made a similar argument that is being made here as to whether intended, I think that in the lower court, the defendant had challenged the basis

[00:33:16] Speaker 04:
for calculating intended loss, but did not take issue with actually using intended loss in the first place.

[00:33:26] Speaker 04:
They made a distinction between that factual, the first factual argument before the lower court and the legal argument that was then made on appeal.

[00:33:34] Speaker 04:
And this court in Hackett did not see those two as being fairly characterizable as the same.

[00:33:42] Speaker 04:
And so our position, the government's position would be that these two

[00:33:46] Speaker 04:
cannot be, they're not of the same, these claims are different.

[00:33:50] Speaker 04:
The claim that was made in the lower court was a factual claim as to the evidence that supported the sophisticated laundering enhancement.

[00:33:57] Speaker 04:
The claim that is now before this court is a legal argument as to how the court should interpret the sophisticated laundering provision.

[00:34:06] Speaker 07:
We didn't think, if it was de novo, what is, how should we understand?

[00:34:10] Speaker 04:
If you did think that it was de novo?

[00:34:12] Speaker 07:
Yeah, if we do think so.

[00:34:13] Speaker 04:
If you applied de novo, I think that you look to,

[00:34:16] Speaker 04:
first of the text and the instructions in the guideline.

[00:34:32] Speaker 07:
Because when I read it, you don't know why you're turning it.

[00:34:35] Speaker 07:
When I read it, IC3, it says subsection B2B applies.

[00:34:38] Speaker 07:
And the government's argument is, well, what that means is if it could have applied.

[00:34:41] Speaker 07:
And I think our colleague Judge Tong pointed out another section that

[00:34:47] Speaker 07:
where it makes sense to read it that way.

[00:34:50] Speaker 07:
But I would say what would probably do in the work without having it right in front of us, probably doing the work in that other section, is the fact that it's clearly written as either this one or that one, like a greater than, whereas here it's a stacking.

[00:35:02] Speaker 07:
So it seems to me the plain language says that you only apply three if B2B applies.

[00:35:12] Speaker 04:
Well, I think, so if you

[00:35:13] Speaker 04:
The way that the district court interpreted it is they started with B to B. Was the defendant convicted under 1956, increased by two levels?

[00:35:23] Speaker 04:
There was a 1956 conviction here.

[00:35:25] Speaker 04:
Then you go to C. If A2 applies, the defendant was in the business of laundering funds, increased by four levels.

[00:35:32] Speaker 02:
So both B. So then that yields a total of six.

[00:35:37] Speaker 04:
It's four at that point because although both B and C apply,

[00:35:44] Speaker 04:
Because they're under the apply the greatest structure.

[00:35:47] Speaker 08:
How can both apply when the instruction says apply the greatest?

[00:35:52] Speaker 08:
Doesn't that suggest you apply one of the three provisions?

[00:35:55] Speaker 04:
Yes, you apply one of the three so but both apply because the defendant was in fact convicted under 1956 there was a 1956 age conviction here So then that's so that's to you, but then you continue as the guidelines instruct you and when it's this structure with apply the greatest you look at the next

[00:36:14] Speaker 04:
the next enumerated provision under this specific offense conduct enhancement.

[00:36:21] Speaker 04:
And that is if there's a 1956 conviction and the defendant was in the business of laundering funds, which the defendants concede they were in the business of laundering funds here, then you increase by four levels.

[00:36:32] Speaker 04:
And so between two and four, because you are applying the greatest, even though both apply, you apply the four.

[00:36:39] Speaker 04:
Then you move on to

[00:36:41] Speaker 04:
B3.

[00:36:42] Speaker 04:
B3 is a different enhancement.

[00:36:48] Speaker 04:
We are moving essentially from B2, B3.

[00:36:51] Speaker 04:
Now we're talking about sophisticated laundering.

[00:36:53] Speaker 04:
And you say, OK, if subsection B2B applies, it doesn't say was applied, which is how the defendant asked that it be interpreted.

[00:37:04] Speaker 04:
It doesn't say if it was used.

[00:37:06] Speaker 04:
It just says if it applies.

[00:37:08] Speaker 04:
It does apply.

[00:37:09] Speaker 04:
because the defendants were convicted of 1956 here.

[00:37:14] Speaker 04:
And so that first part of B3 is satisfied.

[00:37:20] Speaker 04:
And you move to whether the offense involved sophisticated laundering, which it did here.

[00:37:27] Speaker 04:
So you increase by two levels.

[00:37:29] Speaker 07:
So you take the four- Can I ask you about, so structurally,

[00:37:32] Speaker 07:
you know, if you look at this as you got two different types of money launderers, you have direct money launderers, you have people that are third party money launderers, right?

[00:37:40] Speaker 07:
And that's an A1 and A2, as I understand.

[00:37:44] Speaker 07:
And am I correct, is my clerk correct that B2C only applies to third party money launderers?

[00:37:58] Speaker 07:
That would only ever apply to third party money launderers.

[00:38:01] Speaker 07:
In other words,

[00:38:02] Speaker 07:
the the actual what what applied in this case B2C the four level enhancement is for somebody who's a third party money launderer it would not apply to a direct money launderer I think that's a fair reading yes okay so it seems like if you're trying to make sense of what they were trying to do here that you you basically if you're in the if you are a third party money launderer and you're in the business then you're going to get four levels and then if you're not a third party money launderer

[00:38:30] Speaker 07:
You're a direct money launderer, but you're doing sophisticated.

[00:38:34] Speaker 07:
You get four levels.

[00:38:36] Speaker 07:
You get two plus two.

[00:38:37] Speaker 07:
You get B2B, and you get three.

[00:38:42] Speaker 07:
That seems to make some sense.

[00:38:44] Speaker 07:
Is there's a symmetry there?

[00:38:45] Speaker 07:
I don't know.

[00:38:46] Speaker 07:
It seems like that's a way to read it as what they were trying to do.

[00:38:50] Speaker 04:
I think another way to read it is to look at the purpose behind each of the enhancements.

[00:38:57] Speaker 04:
If you take the business of laundering funds

[00:38:59] Speaker 04:
Enhancement the purpose of that is to address Laundering that is done over a regular period of time Routinely with frequency that is what that behavior that offends conduct is what business of laundering funds is aimed at addressing Sophisticated laundering has a different purpose behind it sophisticated laundering the purpose of that is to address conduct that is

[00:39:28] Speaker 04:
is intended to make it more difficult for law enforcement to detect the laundering, trace the transactions.

[00:39:36] Speaker 04:
And so from a purpose perspective, the two enhancements are intended to address different conduct.

[00:39:44] Speaker 08:
And I think... Judge Van Dyke's argument, if I'm understanding the question, and also Ms.

[00:39:51] Speaker 08:
Chen's argument, which is structurally, if you were right, a third-party money launderer could be enhanced more.

[00:39:58] Speaker 08:
than a direct money launderer.

[00:40:00] Speaker 08:
The ceilings would be different.

[00:40:02] Speaker 08:
Why would it make any sense for a third party money launderer to have a ceiling that's higher than a direct money launderer?

[00:40:15] Speaker 04:
Your Honor, I am... One moment, please.

[00:40:37] Speaker 04:
Thank you for the court's indulgence.

[00:40:39] Speaker 04:
There's a distinction between the direct money launderers and the third party money launderers.

[00:40:43] Speaker 04:
And we made that distinction.

[00:40:45] Speaker 04:
We emphasized it in the papers below.

[00:40:48] Speaker 04:
And the distinction is that the direct money launderers, they are laundering their own proceeds.

[00:40:54] Speaker 04:
They are laundering their own the money from their own underlying conduct.

[00:40:59] Speaker 04:
It is the third party money launderers who actually are facilitating others crime.

[00:41:05] Speaker 04:
They are

[00:41:06] Speaker 04:
encouraging and allowing the conduct of other criminals to continue.

[00:41:11] Speaker 04:
And so that is why those individuals should have a higher enhancement as well.

[00:41:20] Speaker 04:
The other thing that I would mention for your honors is that there hasn't been a case out of this court or any circuit that has interpreted this provision the way that

[00:41:32] Speaker 04:
the defendants asked that it be interpreted.

[00:41:34] Speaker 04:
And in fact, the 11th Circuit in 2024 affirmed a sentence in which both the sophisticated published in this.

[00:41:43] Speaker 04:
Yes.

[00:41:44] Speaker 04:
Yes, your honor.

[00:41:45] Speaker 07:
Indra Moth case in this unpublished opinion.

[00:41:47] Speaker 07:
Is that right?

[00:41:48] Speaker 07:
Yes, your honor.

[00:41:49] Speaker 07:
And Wilson Grant Lagoa, which I hate to argue with them, but but it doesn't seem like they really

[00:41:55] Speaker 07:
grappled with, and they didn't have the benefit of Ms.

[00:41:57] Speaker 07:
Chin's argument either.

[00:42:00] Speaker 07:
Certainly, Your Honor, I'm not... There could be a little bit of a drive-by thing going there.

[00:42:05] Speaker 04:
I only acknowledged that the sentence was affirmed and that no court, no circuit court has interpreted it the way that the defendants asked that it be interpreted here.

[00:42:17] Speaker 02:
This is a pretty sophisticated scheme in the sense that it involves foreign countries, different currencies,

[00:42:24] Speaker 02:
the urgency of spending these cards before the victim discovers the fraud and deactivates them.

[00:42:35] Speaker 04:
Yes, your honor.

[00:42:36] Speaker 04:
We thought that there was ample evidence before the lower court to support the finding that there was sophisticated laundering here.

[00:42:42] Speaker 02:
I mean, this was a two week trial, right?

[00:42:46] Speaker 02:
The court sat and heard all this.

[00:42:47] Speaker 04:
That is correct, your honor.

[00:42:49] Speaker 04:
And the evidence showed that a victim could be defrauded, go and purchase a card.

[00:42:54] Speaker 04:
And 13 minutes later, that card was purchased in Illinois.

[00:42:57] Speaker 04:
13 minutes later, that card is laundered in California to purchase electronics.

[00:43:03] Speaker 04:
So it was a very sophisticated network that used runners that were on standby, that were going to 16 plus targets, 16 targets in a day.

[00:43:15] Speaker 04:
And they were engaging in the sort of sophisticated transactions that were designed to conceal the location of the victim's money.

[00:43:24] Speaker 07:
Can I want to make sure the minor participant for she can I get you to talk about why that was appropriate to apply that when the district court did not seem to go through each of the things that we've said that you need to go through but gone through the five factors.

[00:43:43] Speaker 07:
I'm sorry your honor that the minor participant that she was not a minor participant you know she had asked for the minor participant.

[00:43:51] Speaker 07:
Yes, she had asked for a in the district court rejected it and it ain't on the surface because he was a manager.

[00:43:58] Speaker 07:
So it seems like there's an inconsistency there.

[00:44:00] Speaker 07:
But but our case law does seem to say you have to go through those five factors.

[00:44:05] Speaker 07:
And I've had other cases where we've said, well, they didn't really talk about this factor, that factor.

[00:44:14] Speaker 04:
I think, Your Honor, the district court sat through a two week trial, as you know,

[00:44:20] Speaker 04:
her testimony from 27 different witnesses saw the hundreds of exhibits that were exchanged via WeChat between all three defendants and saw the messages specifically involving the defendant, she, where he exercised control over.

[00:44:44] Speaker 07:
Yes, it seems to me,

[00:44:47] Speaker 07:
completely supportable to be clear about my question because it's completely supportable that she was not a minor participant to reach that conclusion.

[00:44:55] Speaker 07:
I guess the bigger question is almost a procedural one.

[00:44:57] Speaker 07:
Does the district court does the district court procedurally do it right in rejecting that by apparently just relying on the fact that he was a manager that he had people under him as opposed to going to the five factors that the commentary talks about you know that

[00:45:17] Speaker 07:
You know the degree to which to defend us to the scope and structure Degree to a suspended planning and it's particularly the that issue of I ran into before where Showing that that he's not substantially less culpable than than the average participant, which is always tough for me because you don't know what the average participants I Why do you not error in that regard?

[00:45:42] Speaker 04:
I apologize, your honor.

[00:45:43] Speaker 04:
I guess the record here is very vast.

[00:45:47] Speaker 04:
I don't know that minor role was actually addressed before the district court.

[00:45:54] Speaker 04:
I think during the sentencing hearing, the only issue was the application of the plus three for the manager supervisor.

[00:46:06] Speaker 04:
I don't think that there was, I don't think that Mr. Xi's counsel argued for the minor role enhancement to apply, so it wasn't before the court to consider.

[00:46:25] Speaker 07:
Who over here would address that on your side?

[00:46:30] Speaker 07:
Okay, so we'll maybe ask you about it when you get back up.

[00:46:33] Speaker 07:
Okay.

[00:46:34] Speaker 04:
Okay.

[00:46:34] Speaker 07:
If you have nothing more to say on this, fine.

[00:46:36] Speaker 04:
Not this time your honor other than I think that in the.

[00:46:42] Speaker 04:
Indefinite whose excerpt of record at pages 46 to 47 I think there is some discussion.

[00:46:50] Speaker 04:
Of the of of Mister she at during the sentencing hearing.

[00:47:05] Speaker 04:
But again, I don't believe that the issue of minor role was addressed during the hearing itself.

[00:47:11] Speaker 04:
Would your honors like to hear about the purpose of concealment, or would you like me to turn to the severance issue?

[00:47:17] Speaker 07:
I don't think I need to.

[00:47:23] Speaker 04:
There are no questions on those issues?

[00:47:25] Speaker 04:
Is there any other issue that you would like to hear from me on?

[00:47:31] Speaker 04:
Your honor then I would your honors.

[00:47:33] Speaker 04:
I would I would see the rest of my time And I would ask that this court affirm the convictions and affirm the sentences Thank you counsel.

[00:47:42] Speaker 07:
Thank you The only issue say that again

[00:47:59] Speaker 05:
So they've ceded their time to me.

[00:48:01] Speaker 07:
OK, so we're going to give you OK, but I'm not giving him it.

[00:48:03] Speaker 07:
No, I'm just kidding.

[00:48:04] Speaker 07:
You can put one on there, but you already know I'm not going to hold it to it.

[00:48:08] Speaker 07:
So go ahead.

[00:48:10] Speaker 05:
So I just first wanted to address very briefly the sure issue before I forget because I will get rolling and I will

[00:48:31] Speaker 05:
Mr. Sher did raise this issue on its she er 304 and 316 the government responded to it in its papers and Ninth Circuit law is again very clear that nothing more needs to be done To preserve a sentencing guideline error than raising it in your paper the fact that it wasn't discussed at argument during the sentencing is not relevant under the Ninth Circuit's law and it's clear in this case that the judge didn't think he needed to address it because as the probation officer had said

[00:49:00] Speaker 05:
Since aggravating role applies, mitigating role doesn't apply.

[00:49:04] Speaker 05:
So with respect to whether it was raised, I think it was clearly raised, and I think that the district court clearly erred in denying it without any discussion.

[00:49:13] Speaker 08:
What did it need to have discussed?

[00:49:15] Speaker 05:
It needed to have done the analysis of all the factors that would have made it a mitigating role.

[00:49:26] Speaker 05:
And the interesting thing about aggravating role is if you supervise only one person, you can get an aggregating role adjustment, aggravating role adjustment.

[00:49:33] Speaker 05:
So if you have an operation that has 100 people in it and you're number 99, you could get an aggravating role adjustment because you supervise one person.

[00:49:41] Speaker 05:
Right?

[00:49:42] Speaker 05:
But you're still a mitigated role with respect to the 98 people above you.

[00:49:48] Speaker 05:
So they're not mutually exclusive, the way that the probation... Is that what we have here, though?

[00:49:53] Speaker 08:
You described the hypothetical factual situation.

[00:49:55] Speaker 05:
Well, we could talk about all the magic lamp people.

[00:49:57] Speaker 05:
We don't know how many magic lamp people there were.

[00:49:59] Speaker 07:
That's a common problem that I've seen in these is we always have, we always say, well, I'm a really low person on the totem pole.

[00:50:04] Speaker 07:
I can't tell you anything about the myriad numbers of people in this vast criminal conspiracy above me.

[00:50:10] Speaker 07:
Even though I think it's supposed to be their burden to show that to get the minor role But we're just supposed to assume that it's really big up It's already taught all the criminal organizations are super top-heavy and I'm the bottom person or the second from the bottom He's like the second to the bottom person right sure because there's like magic lamp.

[00:50:28] Speaker 07:
Well before magic lamp How can we consider that and I'll make sure you get to your other seriously I'm curious about this because I ran into another kid.

[00:50:36] Speaker 07:
How can we actually?

[00:50:38] Speaker 07:
Consider because you don't nobody's really this is kind of par for the course nobody ever gives me Here's the here's the flowchart criminal organization of the triad that I'm that I'm part of like they don't do that They just they they they want us to assume they say I don't know anything about this seat because that's one of the other factor I don't know anything about this organization, but then their attorney Does a good job of arguing it is so we all know it's vast and that this is a low-level person.

[00:51:06] Speaker 07:
It's just it

[00:51:07] Speaker 07:
The commentary factors are great.

[00:51:10] Speaker 07:
They're not good.

[00:51:10] Speaker 07:
I don't like them.

[00:51:11] Speaker 07:
They're hard to... They seem like they...

[00:51:15] Speaker 05:
like they always weigh in favor of somebody getting a minor role adjustment as long as they say they don't know anything about the organization okay so two things one the sentencing commission operates in mysterious manner and so you don't like them but we do know what we do know about minor role is that in 2015 they promulgated an amendment saying we people are not getting minor role enough they are not getting minor role in the way we intended them to

[00:51:39] Speaker 05:
So now we've got this huge list that district courts are required to consider before they make a decision.

[00:51:45] Speaker 05:
So even though you don't like it, the commission wants more people to get minor role.

[00:51:51] Speaker 08:
Why are they required to consider the commentary when the guidelines themselves are not binding?

[00:52:00] Speaker 05:
So that's a really interesting question.

[00:52:01] Speaker 05:
The Ninth Circuit, after Kaiser held the Ninth Circuit

[00:52:08] Speaker 05:
The judges are required to consider these factors.

[00:52:11] Speaker 05:
So whether that's correct or not.

[00:52:12] Speaker 07:
I don't what what case are you referring to clench?

[00:52:17] Speaker 07:
I Think you're referring to clench, but they also said in Castillo They said they considered just said something kind of the opposite in Castillo Not an on about this issue not about this issue though, right?

[00:52:27] Speaker 08:
But the general principle in can steal Castillo held Kaiser made it so that if the guideline text is not genuinely

[00:52:38] Speaker 08:
ambiguous, then I do not need to look to the guideline commentary.

[00:52:43] Speaker 08:
I am not bound by the commentary, right?

[00:52:46] Speaker 08:
Why wouldn't that principle apply here?

[00:52:48] Speaker 05:
Well, it would except for two things.

[00:52:49] Speaker 05:
One, Castillo was about the guidelines added on to, I mean the commentary added on to the guideline, right?

[00:52:57] Speaker 05:
So the guidelines said you had to have these kind of crimes and the commentary said,

[00:53:01] Speaker 05:
and conspiracies, et cetera.

[00:53:03] Speaker 05:
So that was a case.

[00:53:04] Speaker 08:
Whether it added to or not, it was a spin or an interpretation on the guideline, right?

[00:53:09] Speaker 08:
And we have that here.

[00:53:11] Speaker 08:
We have an interpretation of what minor participant means.

[00:53:14] Speaker 02:
And we're asked to look at all these things.

[00:53:15] Speaker 02:
And also, what happened to our discussion in the in-bank decision in Cardi where we said the district court does not have to engage in a long dialogue as to all of the factors that it considered as long as a reviewing court can ascertain from the record

[00:53:31] Speaker 02:
the court's reasoning and I mean we can look at the evidence and the pre-sentence report in particular which the district court adopted and answer the questions even if we were to apply those factors.

[00:53:44] Speaker 05:
I'm not so sure that that's the case with Mr. Scher and mitigating role, honestly.

[00:53:49] Speaker 05:
So trying to answer all these questions in order.

[00:53:52] Speaker 05:
One, I think that the question whether minor is ambiguous or not, because if it's ambiguous, then we can go to the commentary.

[00:54:02] Speaker 05:
It's quite a different question from Castillo, which is whether substantive offense is ambiguous in such a way that we could go to the commentary and decide that,

[00:54:11] Speaker 05:
a conspiracy is also a substantive offense.

[00:54:14] Speaker 08:
But you agree that if I find that minor participant is not genuinely ambiguous, right?

[00:54:18] Speaker 08:
That's Kaiser's language.

[00:54:20] Speaker 08:
And I have to exhaust all the traditional tools of interpretation.

[00:54:23] Speaker 08:
I look to the structure, dictionary definitions, and all the rest.

[00:54:26] Speaker 08:
And after all that process,

[00:54:29] Speaker 08:
I find that minor participant is not ambiguous.

[00:54:32] Speaker 08:
I don't need to look at the factors, right?

[00:54:34] Speaker 05:
I agree with that.

[00:54:35] Speaker 05:
I just think it's possible that the word minor is ambiguous.

[00:54:38] Speaker 05:
And then even if it were or were not ambiguous,

[00:54:42] Speaker 05:
This question about how does the person who's at the bottom identify the roles of all the people on the top?

[00:54:48] Speaker 05:
In this case, he couldn't.

[00:54:49] Speaker 05:
But the record was very clear that there were quite a few people on the top.

[00:54:52] Speaker 05:
There were the actual fraudsters.

[00:54:54] Speaker 05:
There's no suggestion that Magic Lamp was the actual fraudsters.

[00:54:58] Speaker 05:
So there were the actual fraudsters.

[00:55:00] Speaker 05:
Then there was Magic Lamp.

[00:55:02] Speaker 05:
Then there was by, and then there was who, and then who allegedly recruited Shrew.

[00:55:07] Speaker 05:
Who was my client, so I'm not going to say he did recruit Shrew, but what I'm saying is that in terms of minor role in this operation, there is a question that it was minor, and Judge did not answer that question, right?

[00:55:19] Speaker 02:
He didn't address it at all.

[00:55:23] Speaker 02:
Can't we look at the sentence in part?

[00:55:25] Speaker 02:
Bye got the most, then she, and then who?

[00:55:29] Speaker 05:
Yeah, so he was... No, no, it was the other way.

[00:55:31] Speaker 05:
Bye got the most, who got the middle, and sure got the least.

[00:55:35] Speaker 05:
So we know that at least the judge did think he was the least culpable, but he didn't go through the analysis, which is still required after Booker, after Kaiser, that you get the guidelines right.

[00:55:44] Speaker 02:
But why do we not look at the contents of the pre-sentence report, which is pretty extensive, as all three defendants... Right, exactly.

[00:55:50] Speaker 05:
The pre-sentence report said he couldn't get minor role because he got aggravating role.

[00:55:53] Speaker 02:
Right.

[00:55:54] Speaker 05:
Right.

[00:55:54] Speaker 05:
That's what it said.

[00:55:55] Speaker 05:
It didn't say I've done the analysis with respect to mining.

[00:55:58] Speaker 08:
It said it supervised the co-conspirator.

[00:56:01] Speaker 05:
Right.

[00:56:01] Speaker 05:
Yes.

[00:56:01] Speaker 05:
Yan Fu or second sister.

[00:56:04] Speaker 05:
But if there's let's say at least five fraudsters on top and then there's magic lamp and then there's by and then there's who then sure is like the third.

[00:56:14] Speaker 05:
Yeah.

[00:56:15] Speaker 07:
This is my point.

[00:56:16] Speaker 07:
That's if you're applying that commentary test and that but I I've always found that to be sort of a

[00:56:22] Speaker 07:
I mean, in some ways it sounds like you're saying, yeah, the commentary language here leads to one conclusion, but I'm not sure that if we were to just ask whether or not this person's a minor participant, relying on sort of common understanding of minor, that it seems to be pretty easy to uphold the denial of a minor participant, because this is somebody who's managing other people.

[00:56:46] Speaker 07:
He's worked his way up in the organization, but if you

[00:56:50] Speaker 07:
apply that one of the that one factor of the five then then it might lead to a different conclusion so that kind of leads us back to the the commentary you know I think you had said well that other that that other case Castillo Castillo or however is different because that's a that's changed it's sort of arguably changing this that using the commentary to change the guidelines but I don't know here it feels like it might be in that boat too

[00:57:16] Speaker 05:
And this is all something that Judge Barrett was supposed to decide, right?

[00:57:20] Speaker 05:
We're up here deciding what is the criteria for minor role when Judge Barrett didn't even consider these.

[00:57:26] Speaker 07:
Did I understand correctly you said that?

[00:57:28] Speaker 07:
It was never brought up to him, but it's still somehow preserved.

[00:57:31] Speaker 05:
No, no, no, no.

[00:57:31] Speaker 05:
It was in all the sentencing papers.

[00:57:33] Speaker 05:
It was at ER 304.

[00:57:36] Speaker 05:
Sure, ER 304 and 316.

[00:57:38] Speaker 05:
He argued for minor role.

[00:57:40] Speaker 05:
The government in its papers argued against minor role.

[00:57:44] Speaker 05:
Then you go to court and you go through all of the

[00:57:46] Speaker 07:
And he just was never discussed.

[00:57:48] Speaker 05:
It was never discussed.

[00:57:49] Speaker 05:
But again, the Ninth Circuit is very clear that raising an objection in the sentencing paper is sufficient to preserve the issue.

[00:57:57] Speaker 05:
And this is kind of goes to what I wanted to say with my eight main issue, which is the plane error test.

[00:58:03] Speaker 07:
It is another minute on.

[00:58:05] Speaker 07:
But let's get to what you wanted to talk about.

[00:58:07] Speaker 05:
So that goes to whether it's plain error or not.

[00:58:10] Speaker 05:
And I think I heard you say that that's not really fair to the district court judge if it wasn't discussed.

[00:58:15] Speaker 05:
But in the Supreme Court case of Henderson, the Supreme Court was really clear that plain error is not like a...

[00:58:22] Speaker 05:
system to judge, you know, scoring system for judges.

[00:58:26] Speaker 05:
So it really isn't a matter of whether it was fair to the district court or not.

[00:58:30] Speaker 05:
It's a matter of whether there was error.

[00:58:31] Speaker 05:
And this is an error that, you know, takes years out of the lives of our clients.

[00:58:35] Speaker 05:
So I think that it isn't under a Plain Air Standard review.

[00:58:40] Speaker 05:
Even if it were, I cite at page 29 of my reply, numerous cases where no court has ever decided an issue and yet the Ninth Circuit holds its plain based on the plain text of the guideline.

[00:58:52] Speaker 05:
And I would argue that the plain text of the glide line clearly favors our argument.

[00:58:57] Speaker 05:
The government argues that B2B applies even though B2P says apply the greatest.

[00:59:03] Speaker 05:
I don't know, I mean, I'll look at your example later, but I don't know how B2B could apply when it says apply the greatest and B2C applied.

[00:59:13] Speaker 08:
Assuming we're on de novo review, so forget the plain error review for a second, if I think based on that other provision that

[00:59:20] Speaker 08:
2S1.1 is ambiguous.

[00:59:22] Speaker 08:
Don't you also have the rule of lenity that you can resort to?

[00:59:25] Speaker 05:
Yes.

[00:59:25] Speaker 05:
I also do have the rule of lenity if we are on de novo review, yes.

[00:59:30] Speaker 05:
And clearly, the fact that we've been discussing it for those long shows that it would be somewhat ambiguous and therefore the rule of lenity would apply.

[00:59:38] Speaker 05:
The government was stumped for a moment as to why the third party launderer would get a plus six.

[00:59:46] Speaker 05:
potentially, whereas the direct money launderer would only get a plus four.

[00:59:50] Speaker 05:
And when they came back, they said it was because they're worse because the conduct encourages crime.

[00:59:58] Speaker 05:
But that's why they get a plus four without even being sophisticated.

[01:00:02] Speaker 05:
If you look at the reason for the amendment, that's what the commission even says.

[01:00:06] Speaker 05:
They get a plus four without even being sophisticated.

[01:00:09] Speaker 05:
because the commission agrees that's bad, OK?

[01:00:13] Speaker 05:
The government talks about how this is a different harm.

[01:00:15] Speaker 05:
I agree it's a different harm.

[01:00:17] Speaker 05:
But the Sentencing Commission is really clear that you don't just add up the harms, right?

[01:00:21] Speaker 05:
That's why they often have apply the greatest.

[01:00:24] Speaker 05:
At chapter one.

[01:00:25] Speaker 07:
It also occurred to me that if you're in the business of money laundering, you're not very good at your business.

[01:00:31] Speaker 07:
If you're not sophisticated.

[01:00:33] Speaker 07:
So it just seemed to me like I could it seemed like they're built in.

[01:00:36] Speaker 07:
Of course, it's going to be sophisticated.

[01:00:37] Speaker 07:
It's just going to be.

[01:00:39] Speaker 07:
And so it's already assumed that it's going to be sophisticated.

[01:00:42] Speaker 05:
It's highly likely that it would be sophisticated, right?

[01:00:45] Speaker 05:
But the commission is even saying, even if it's not, even if it's bad, like not sophisticated, if you're in the business, you get the plus four.

[01:00:53] Speaker 05:
But we're not going to hit you with another plus two.

[01:00:56] Speaker 05:
And that I also wanted to quote from the Sentencing Commission that talks about, because the government says, well, it's a different harm, right?

[01:01:02] Speaker 05:
The relationship between punishment and multiple harms is not simply additive.

[01:01:08] Speaker 05:
It would not be proper to assign points for each kind of harm and simply add them up, irrespective of context and total amounts.

[01:01:16] Speaker 07:
And I went through the question on the, do you agree with the government?

[01:01:20] Speaker 07:
I mean, there is that one 11th circuit case and they, so they said there was no decision that, um, that goes the other way.

[01:01:27] Speaker 07:
I think there are, as I understood it, having, having looked at this, uh, there is that 11th or case that's unpublished and seems to reach it does what they say, but it doesn't really explain.

[01:01:37] Speaker 07:
explain it the you know doesn't explain why anything at the depth of what we've been talking about it here this morning then there are a bunch of other cases that do apply it the way you're saying I don't know that there's any other cases other than eleven I don't know there's any case going either way that is really described are you aware of any no but what I am aware of is that in district court generally it doesn't get applied because we object right so there wouldn't be like a

[01:02:03] Speaker 05:
appellate decision on the application of both of them, because the courts don't apply both of them.

[01:02:09] Speaker 05:
And then there's no appeal, unless the government's going to appeal.

[01:02:11] Speaker 05:
And they very, very rarely appeal sentencing guideline issues.

[01:02:16] Speaker 05:
So that would kind of explain for the lack of any actual cases discussing the issue that we're talking about.

[01:02:22] Speaker 05:
We generally prevail in district court.

[01:02:24] Speaker 05:
And then there is no appeal.

[01:02:25] Speaker 05:
The 11th Circuit case, as you said, it doesn't even address the issue.

[01:02:29] Speaker 05:
It doesn't really discuss at all, really, whether or not

[01:02:33] Speaker 05:
they could apply based on the language of it.

[01:02:36] Speaker 05:
And then one other point I wanted to make is that I went through the guidelines to find out other cases in which there was sophisticated means and in the business.

[01:02:45] Speaker 05:
And I found two examples, and both of them were plus two and plus two.

[01:02:49] Speaker 05:
In other words, you get a maximum of plus four for being in the business and sophisticated.

[01:02:55] Speaker 05:
There's no reason why suddenly in 2S1.1, the Sentencing Commission would say that adds up to a plus six.

[01:03:01] Speaker 05:
And I think it goes back to what we've been discussing, that there is no reason why the Sentencing Commission would want to create a possibility that third-party launderers and third-party launderers alone are susceptible to the plus six.

[01:03:17] Speaker 07:
All right.

[01:03:17] Speaker 07:
Well, I feel like time inflation once again, but I really appreciate the argument from both sides and in all of our cases this morning.

[01:03:25] Speaker 07:
And this will wrap up our Judge Tong got

[01:03:30] Speaker 07:
A lot of extra time than Amazon because he's supposed to have had in his first day of argument.

[01:03:34] Speaker 07:
Yeah.

[01:03:35] Speaker 07:
Thank you.

[01:03:35] Speaker 07:
Thank you both all of your time.

[01:03:37] Speaker 07:
Thank you.

[01:03:37] Speaker 07:
And we'll be back on Friday.