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FILED: February 16, 2011

IN THE COURT OF APPEALS OF THE STATE OF OREGON

STATE OF OREGON,

Plaintiff-Respondent,

v.

EDWARD ANATOLYEVIC KHOLSTININ,

Defendant-Appellant.

Clackamas County Circuit Court
CR0700901
A137717

Jeffrey S. Jones, Judge.

Argued and submitted on October 28, 2009.

Daniel C. Bennett, Deputy Public Defender, argued the cause for appellant. With him on the brief was Peter Gartlan, Chief Defender, Appellate Division, Office of Public Defense Services.

Douglas F. Zier, Assistant Attorney General, argued the cause for respondent. With him on the brief were John R. Kroger, Attorney General, and Jerome Lidz, Solicitor General.

Before Haselton, Presiding Judge, and Armstrong, Judge, and Carson, Senior Judge.

ARMSTRONG, J.

Convictions for laundering a monetary instrument reversed; remanded for resentencing; otherwise affirmed.

ARMSTRONG, J.

Defendant was convicted of 24 counts of identity theft, ORS 165.800, and 9 counts of laundering a monetary instrument, ORS 164.170. He raises several assignments of error on appeal. We agree with defendant on one of them--that the court erred in denying his motion for a judgment of acquittal on the money-laundering counts--but we reject the other assignments of error without discussion. Accordingly, we reverse defendant's convictions for laundering a monetary instrument and remand for resentencing.

Because our review concerns the denial of a motion for a judgment of acquittal, we state the facts in the light most favorable to the state. State v. Rader, 348 Or 81, 83, 228 P3d 552 (2010). Defendant requested a refund at a Cash Connection store in Portland of an unsuccessful Western Union wire transfer of funds to Russia. The next day, he appeared at a Cash Connection store in Clackamas County and requested a refund of another unsuccessful Western Union wire transfer of funds to Russia. As it turned out, the same Cash Connection employee handled both transactions, and she realized that defendant had used different names and identifications to request the two refunds. While defendant was in the store, the employee called the police to report her observations, which led the Clackamas County Sheriff's Office to dispatch two officers to the store to investigate.

One officer approached defendant in the store and asked for identification. Defendant supplied identification in his true name and, thus, immediately established that he had used falsified identification for both refund requests. The officer proceeded to arrest defendant for identity theft. An ensuing search of defendant and, pursuant to a warrant, of defendant's rental car produced a large number of Texas driver's licenses, each with a different name but all with a photograph of defendant; approximately $80,000 in cash; Western Union and Moneygram receipts for wire transfers to Russia; and a large number of prepaid Visas and Mastercards that were subsequently determined to have been encoded with account numbers of Wells Fargo customers and used in a series of fraudulent ATM withdrawals.

In addition to the 24 counts of identity theft of which he was convicted, defendant was charged with 9 counts of money laundering. Each money-laundering count alleged that, on a specified date, defendant "did unlawfully and knowingly transfer or attempt to transfer funds with the intent to promote the carrying on of unlawful activity." Those counts were based on ORS 164.170(1)(b)(A), which provides:

"(1) A person commits the crime of laundering a monetary instrument if the person:

"* * * * *

"(b) Transports, transmits or transfers or attempts to transport, transmit or transfer a monetary instrument or funds:

"(A) With the intent to promote the carrying on of unlawful activity[.]"

Defendant had used the credit cards to make numerous fraudulent withdrawals of cash from ATM machines, mostly in California. On the days identified in the indictment, he used the fraudulently obtained cash to send, or attempt to send, funds to Russia through Western Union and Moneygram wire transfers.

At the end of the state's case, and at the close of all the evidence, defendant moved for a judgment of acquittal on the money-laundering counts on the ground that the state had not offered any evidence from which the jury could find that defendant's intent in transferring or attempting to transfer the funds was to promote the carrying on of unlawful activity. The state responded that the evidence in the record would permit the jury to find that defendant had made the transfers to avoid federal transaction-reporting requirements, to evade taxes, or to otherwise separate him from the stolen money, each of which, according to the state, would constitute the carrying on of unlawful activity. The trial court denied the motion, and the jury convicted defendant of all of the money-laundering counts.

On appeal, the parties basically reprise their trial arguments. Those arguments reflect an ongoing debate about the federal money-laundering statutes on which the Oregon money-laundering statutes are based. The focus of that debate is the distinction that the federal and Oregon money-laundering statutes draw between financial transactions that are conducted with the intent to promote the carrying on of unlawful activity--the promotion prohibition--and those conducted with knowledge that the transactions are designed to conceal or disguise the nature, location, source, ownership, or control of the proceeds or to avoid a federal transaction-reporting requirement--the concealment prohibition.

Defendant was charged with violating the Oregon counterpart of the promotion prohibition, not the concealment prohibition.(1) As we will explain, that matters. There has been no disagreement among the federal courts about the meaning and reach of the concealment prohibition. However, there has been a distinct split among the federal circuit courts about the reach of the promotion prohibition.

According to some commentators and federal circuit courts, the promotion prohibition is intended to reach transactions through which criminal actors and enterprises fund their ongoing, that is, future, criminal activities. It is not intended to reach transactions by which criminal actors and enterprises facilitate or complete the unlawful activities that produced the proceeds that are the subject of the transactions. See, e.g., United States v. Heaps, 39 F3d 479, 484-86 (4th Cir 1994); United States v. Jackson, 935 F2d 832, 840-42 (7th Cir 1991); Maura E. Fenningham, Note, A Full Laundering Cycle Is Required: Plowing Back the Proceeds to Carry on Crime IS the Crime Under 18 U.S.C.