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United States v. Davis

United States District Court, D. Colorado

December 19, 2017

6. BRADEN DAVIES, 7. SYED I. SHAH Defendants.


          William J. Martinez United States District Judge

         Now before the Court in this drug conspiracy and money laundering case is the Joint Motion to Exclude or Limit Evidence of Drug Trafficking and Distribution, filed by Defendants Braden Davies (“Davies”) and Syed I. Shah (“Shah”) (together, “Defendants”). (ECF No. 196.) For the reasons explained below, the Motion is granted in limited part.

         I. BACKGROUND

         The Government initiated this case in 2014, charging 24 counts against eight alleged co-conspirators. In general terms, the Government alleges that co-Defendant Daniel Fernandez, working with co-conspirators, sent controlled substances from Canada to Colorado for sale, and engaged in a related conspiracy to launder the proceeds of those drug sales by depositing them into bank accounts in Canada controlled by alleged co-conspirators, including Davies and Shah, who then allegedly withdrew the funds and delivered them to Fernandez, less a “commission.”

         Davies and Shah are not charged with drug distribution, only money laundering. Count 2 charges Davies and Shah with conspiracy to commit money laundering, 18 U.S.C. § 1956(h), by engaging in financial transactions designed to conceal the proceeds of drug distribution. In addition, Davies is charged in Count 9 with a single transaction in violation of §§ 1956(a)(1)(B) & 2, occurring on or about May 21, 2013, and Shah is charged in Count 18 with a violation of §§ 1956(a)(1)(B) & 2, occurring on or about February 17, 2014. The Government also claims its evidence will show Shah engaged in a total of 19 money laundering transactions between July 2011 and February 2014, including 18 un-charged transactions preceding the one that is charged. (ECF No. 202 at 8.) The Government likewise claims Davies committed four additional uncharged acts of money laundering, all in 2013. (Id. at 8-9.)

         Defendants Davies and Shah were previously set for a joint, two-defendant trial, and the Court re-sets a two-defendant trial below.[1]

         II. ANALYSIS

         Defendants argue that “[b]ecause there is no allegation that Mr. Davies and Mr. Shah were involved in the drug trafficking or distribution alleged against the other defendants . . . that evidence should be excluded or substantially limited in a trial against [only] Mr. Davies and Mr. Shah, ” pursuant to Federal Rules of Evidence 401-03. (ECF No. 196 ¶ 8.) They argue that drug trafficking evidence is irrelevant to the money laundering charges against them, and that permitting the Government to “parade in front of the jury evidence of numerous completed and attempted drug deals . . . one . . . .within 1000 feet of a school, ” would provoke an improper emotional response from the jury, in violation of Rule 403. (Id. ¶ 14.)

         However, for the Government to prove Counts 9 and 18 it must show these financial transactions involved proceeds of illegal drug trafficking. (ECF No. 1 at 6, 10.) Further, the Government must prove Defendants knew the money represented the proceeds of unlawful activity, and conducted the financial transactions knowing they were designed to conceal or disguise the source, ownership, or control of the money involved. Id.; Tenth Circuit Crim. Pattern Jury Instr. § 2.73.1 (2011 ed., Jan. 2017 update).

         Furthermore, Defendants are charged in Count 2 with conspiracy to launder money. Thus, the Government must prove Defendants' participation in a conspiracy, including “an agreement with another person to knowingly conduct a financial transaction involving the proceeds of [drug trafficking], ” and that Defendants had “knowledge of the essential objections of the conspiracy” and “knowing and voluntary involvement.” United States v. Keck, 643 F.3d 789, 794 (10th Cir. 2011). In addition, the Government must prove that “the conspirators designed the transaction with the intent to conceal or disguise the nature, location, source, ownership or control of [the] ill-gotten proceeds.” United States v. Salcido, 33 F.3d 1244, 1247 (10th Cir. 1994).

         Given the Government's burden to prove these elements, evidence of drug trafficking is also relevant to the money laundering charges against these Defendants. The Government must prove that the money deposited or accepted by Defendants in Counts 9 and 18 was, in fact, the proceeds of drug trafficking, that Defendants knew it represented the proceeds of illegal activity, and that they acted knowingly to conceal its source or ownership. Because evidence of drug trafficking is both relevant and necessary to the charges against Defendant, the Court cannot enter a categorical exclusion of such evidence. To do so would be tantamount to preventing the Government from proving the counts as to which the Grand Jury indicted these Defendants, something this Court will not do. Indeed, Defendants cite no authority for excluding such evidence in a similar case, despite the large body of case law addressing drug trafficking and money laundering conspiracies. Thus, Defendants have not offered a basis to exclude all evidence of drug trafficking.

         Nevertheless, the Court agrees, to some extent, with Defendants. At some point, admission of all of the Government's evidence regarding drug trafficking would be of at most marginal relevance to the money laundering charges against these Defendants. Putting on the entirety or even a large portion of the Government's case regarding the drug conspiracy-in which Defendants are not charged-would, undoubtedly, become cumulative, a waste of time, and unduly prejudicial, particularly given the likelihood that evidence of an extensive drug trafficking effort will provoke an emotional response from the jury. See Fed. R. Evid. 403; United States v. Irving, 665 F.3d 1184, 1213 (10th Cir. 2011) (“unfair prejudice in the Rule 403 context means an undue tendency to suggest decision on an improper basis, commonly, though not necessarily, an emotional one” (internal quotation marks omitted; alterations incorporated)).

         Accordingly, the Court agrees that some limitation must be placed on the Government's admission of evidence related to drug trafficking in which Defendants are not alleged to have participated. The Court will not allow the Government to put on all the same evidence in a two-defendant, three-count money laundering trial that it might have put on if all defendants and counts were being tried together in an eight-defendant, 24-count drug trafficking trial. However, where to draw the line on such evidence is a difficult question which the Court finds cannot be resolved by pretrial order, outside the presentation of the evidence in context.

         As earlier discussed, Defendants' suggestion that only evidence directly tied to Counts 8 and 19 should be admitted is untenable, given the conspiracy charge. (See ECF No. 196 ¶ 13.) The Government must prove not only these two transactions, but also Defendants' participation in a broader conspiracy to launder money. Almost by definition, proving this conspiracy charge calls for proving additional acts of money laundering, including the acts and agreement of other persons, and that any additional instances of alleged money laundering themselves represented the proceeds of drug trafficking. To exclude all evidence arguably unrelated to Counts 9 and 18 would be tantamount to eliminating the conspiracy charge from this case. Again, Defendants cite no authority supporting such a blanket ...

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