TABLE OF CONTENTS

TABLE OF AUTHORITIES    iii

ARGUMENT           1

I.              DEFENDANTS WILFULLY LAUNDERED $20,000 IN ILLEGAL PROCEEDS TO CONCEAL THE SOURCE, OWNERSHIP AND NATURE OF THE FUNDS      3

II.            THE DISTRICT COURT ABUSED ITS DISCRETION IN CONCLUDING THAT DEFENDANTS DID NOT COMMIT “HEARTLAND” MONEY LAUNDERING             9

A.            Defendants Misstate the Standard of Review            10

B.             The Money Laundering Guideline Covers Not Just “Professional” Money Launderers              12

1.             Nature of Proceeds Laundered  12

2.             Amount of Proceeds Laundered                14

3.             Rejected Amendment to Guideline            15

C.             Neither the DOJ Text nor the Statistical Profile Supports Departure in the Present Case         17

D.            The Independent Counsel’s Role as Prosecutor is Not a Basis for Departure             20

E.             The District Court Erred in Departing on the Basis of the Source of the Proceeds Laundered and the Purpose of the Laundering     22

III.           THE DISTRICT COURT ABUSED ITS DISCRETION IN APPLYING THE FRAUD GUIDELINES TO DEFENDANTS’ MONEY LAUNDERING CONDUCT            23

IV.           REVERSAL AND REMAND OF THE SENTENCE IS REQUIRED BECAUSE THE DISTRICT COURT RELIED ON IMPROPER FACTORS IN DEPARTING DOWNWARD        26

V.             THE DISTRICT COURT MISAPPLIED THE GUIDELINES BY FAILING TO CONSIDER WHETHER FERROUILLET ABUSED A POSITION OF PUBLIC TRUST AND WHETHER HE USED A SPECIAL SKILL IN CONNECTION WITH HIS NON-MONEY LAUNDERING CRIMES      29

CONCLUSION         30

TABLE OF AUTHORITIES

CASES

Koon v. United States, 116 S.Ct. 2035 (1996)          7, 11, 12, 15, 28

United States v. Adams, 74 F.3d 1093 (11th Cir. 1996)           7, 8

United States v. Bart, 973 F. Supp. 691 (W.D. Tex. 1997)       9

United States v. Brennick, 134 F.3d 10 (1st Cir. 1998)             11, 12

United States v. Carpenter, 95 F.3d 773 (9th Cir. 1996)          19, 20

United States v. Davidson, 984 F.2d 651 (5th Cir. 1993)         27

United States v. Dethlefs, 123 F.3d 39 (1st Cir. 1997)              12, 22

United States v. Dobbs, 63 F.3d 391 (5th Cir. 1995)                22, 23

United States v. Green, 964 F.2d 365 (5th Cir. 1992)              19, 20, 26

United States v. Hopkins, 916 F.2d 207 (5th Cir. 1990)           6, 7, 19, 20, 24, 26

United States v. LeBlanc, 24 F.3d 340 (1st Cir. 1994)              7, 8

United States v. Leonard, 61 F.3d 1181 (5th Cir. 1995)           9

United States v. McDowell, 109 F.3d 214 (5th Cir. 1997)        12

United States v. Morris, 131 F.3d 1136 (5th Cir. 1997)            29

United States v. Morris, 18 F.3d 562 (8th Cir. 1994)                7, 8

United States v. Pierro, 32 F.3d 611 (1st Cir. 1994) 7, 8

United States v. Ripinsky, 109 F.3d 1436 (9th Cir. 1997)         7, 8

United States v. Searcy, 132 F.3d 1421 (11th Cir. 1998)         12

United States v. Skinner, 946 F.2d 176 (2d Cir. 1991)              9

United States v. Snyder, --- F.3d ---, 1998 WL 49094 (1st Cir. Feb.13, 1998)         12, 20

United States v. Stout, 32 F.3d 901 (5th Cir. 1994)  27

United States v. Tello, 9 F.3d 1119 (5th Cir. 1996)  27

United States v. Willey, 57 F.3d 1374 (5th Cir. 1995)               8, 9, 13

United States v. Winters, 105 F.3d 200 (5th Cir. 1997)             3, 8, 10-12, 15, 21

Williams v. United States, 503 U.S. 193 (1992)        27, 28

STATUTES

18 U.S.C. § 1956      23

2 U.S.C. § 441b        19

28 U.S.C. § 594        21

LAWS

Federal Election Campaign Act                1

MISCELLANEOUS

1st Cir. Rule 36.2(b)6               9

2nd Cir. Rule 0.23    9

Craig Donsanto, Federal Prosecution of Election Offenses, (6th ed. 1995)               18,
                23

H.R. Rep. No. 104-272 (1995), reprinted in 1995 U.S.C.C.A.N. 335       14, 16, 17

U.S.S.G. § 2S1.1       14, 15

United States Attorney’s Manual § 9-105.000         21

ARGUMENT

                Defendants repeatedly and continually urge they violated the Federal Election Campaign Act.  That may well have been the motive for their actions, but it is their conduct, not their motive for that conduct, that determines their sentences.  Although both defendants may have intended to funnel stolen money to a defeated political candidate, Henry Espy, who just happened to be the brother of the Secretary of Agriculture with some very sensitive issues regarding defendant Hemmingson’s company before him, defendants’ conduct was to ensure that their illegal contribution would go undetected.  To accomplish that goal, the defendants fraudulently obtained $20,000 through the phony retainer letter and an accounting adjustment in the corporation’s books and records.  They then laundered the check through an Algiers grocery store to disguise and conceal the true source, ownership and nature of those funds.  Appropriately, a grand jury indicted and a petit jury convicted both defendants of money laundering, the offense for which they should be sentenced.

                Defendants’ primary assertion to justify the district court’s erroneous downward departure is that their conduct only technically fell within the language of the money laundering statutes.  But this representation proceeds from a fragmented, selective, and distorted view of the facts developed at trial.  The entirety of defendants’ conduct demonstrates that they engaged in financial transactions typical of those seeking to conceal ill-gotten proceeds, which falls foursquare within the heartland of money laundering.

                Hemmingson also contends that the district court cited factors permissibly removing this case from the “heartland” of the money laundering guideline.  He asserts as well that the degree of departure, to bring conduct punishable by 41 to 51 months imprisonment down to 12 months in a half-way house/work release program, was reasonable.  These claims are unavailing because the district court cited as a basis for departure only impermissible factors and factors already taken into account by the money laundering guideline without finding them exceptional.

                Ferrouillet contends that a recent Sentencing Commission report supports defendants’ sentences, and that the district court properly concluded that he did not abuse a position of trust or use a special skill warranting a two point enhancement under U.S.S.G. § 3B1.3.  These arguments also fail because the Sentencing Commission issued the report four months after the district court’s departure opinion and the district court misapplied U.S.S.G. § 3B1.3 by not considering whether Ferrouillet abused a position of public trust or whether he used a special skill in committing his non-money laundering crimes.

I.              DEFENDANTS WILFULLY LAUNDERED $20,000 IN ILLEGAL PROCEEDS TO CONCEAL THE SOURCE, OWNERSHIP AND NATURE OF THE FUNDS

                Defendants’ principal argument is that the district court properly departed because their criminal activity amounted only to a FECA violation, i.e., the making of an illegal corporate contribution to a political candidate.  (Ferr. brief 12-14; Hemm. brief 30-89).^[1]  If this argument fails, this Court must conclude that the district court abused its discretion in departing to the fraud guideline.  See United States v. Winters, 105 F.3d 200, 206-208 (5th Cir. 1997) (holding district court abused its discretion in departing from guidelines based on factor unsupported by the record).  The evidence presented at trial refutes defendants’ argument and the district court’s erroneous downward departure.

                The Government, in its Opening Brief, described for this Court the evidence of illegal conduct — interstate transportation of a $20,000 security misappropriated by fraud and money laundering — that distinguished this case from a typical FECA prosecution.  (See Brief for the United States of America “U.S. Brief” at pp. 17-23).  During the summer of 1994, Henry Espy, the brother of Secretary of Agriculture Michael Espy, had less than $500 to cover the remaining $50,000 due on a seriously delinquent bank loan resulting from his unsuccessful race to succeed his brother in Congress the previous year.  (20R.A.11-12; Ex.108Ka).  In May 1993, Ferrouillet signed his law firm as guarantor on these obligations because he wanted to ingratiate himself with Henry Espy.  (25R.A.28-29, 37-38; Ex.46I).  In February and