United States District Court, District of Columbia
MEMORANDUM OPINION AND ORDER
BERMAN JACKSON, UNITED STATES DISTRICT JUDGE
Paul J. Manafort, Jr. has filed a motion to dismiss Count Two
of the Superseding Indictment, which is the money laundering
charge, and to strike the forfeiture allegation based on that
charge. Def.'s Mot. to Dismiss Count Two and to Strike
the Forfeiture Allegation [Dkt. # 237] (“Def.'s
Mot.”). In general, the money laundering
provisions of the United States Code prohibit the use of
financial transactions to advance or conceal the commission
of certain criminal offenses, and they bar engaging in
financial transactions with the proceeds of criminal
offenses. Defendant's motion concerns the intersection
between these provisions and the statute that criminalizes
the alleged underlying illegality in this case: the Foreign
Agent Registration Act (“FARA”). Manafort
questions whether and how the financial transactions itemized
in the indictment could, as charged, “promote” a
failure to register in violation of FARA, and whether a
violation of FARA could generate “proceeds” to
which the money laundering statute applies. After
consideration of the parties' briefs and the applicable
statutes and case law, the Court will deny the motion to
dismiss the count.
Two charges a conspiracy to violate the money laundering
statute in several ways. Superseding Indictment [Dkt. # 318]
(“Ind.”) ¶¶ 40-41. Paragraph 41(a) of
the indictment alleges that Manafort violated 18 U.S.C.
§ 1956(a)(2)(A) by conspiring with others to transfer
funds into and out of the United States “with the
intent to promote” the carrying on of a
“Specified Unlawful Activity, ” that is, a felony
violation of FARA. Ind. ¶ 41(a).
41(b) alleges that defendant violated 18 U.S.C. §
1956(a)(1)(A)(ii) and § 1956(a)(1)(B)(i) by conspiring
with others to conduct financial transactions using the
“proceeds” of the “Specified Unlawful
Activity” - which is, again, the FARA violation - in
two different unlawful ways: (i) with the intent to engage in
conduct constituting a violation of the Internal Revenue
Code; and (ii) knowing that the transactions were designed to
conceal the source and ownership of the proceeds of the
Specified Unlawful Activity. Id. ¶ 41(b).
both objects of the money laundering conspiracy charged in
Count Two involve an alleged violation of the Foreign Agent
Registration Act. Manafort argues that FARA simply bans the
failure to register as a foreign agent, and not the act of
serving as a foreign agent, so the conduct detailed in the
indictment could not have “promoted” the
commission of a FARA offense, and the offense could not have
generated “proceeds” for purposes of the money
laundering statute. He maintains that, therefore, neither
section of Count Two alleges a crime.
Manafort's motion requires a close analysis of the
Foreign Agent Registration Act. FARA provides:
No person shall act as an agent of a foreign principal unless
he has filed with the Attorney General a true and complete
registration statement and supplements thereto . . . .
[E]very person who becomes an agent of a foreign principal
shall, within ten days thereafter, file with the Attorney
General, in duplicate, a registration statement, under oath
on a form prescribed by the Attorney General.
22 U.S.C. § 612(a). Section 618(a) of the statute makes
it a felony to willfully violate the Act or to willfully make
a false statement of material fact in, or omit a material
fact from, a registration statement or supplement. 22 U.S.C.
to Manafort, FARA “requires the filing of a
registration statement, and . . . makes it a crime to
willfully fail to file such a statement, ” but it does
not prohibit acting as an agent of a foreign
principal, even while unregistered. Def.'s Mot. at 4.
Thus, he argues, a violation of FARA is an act of omission
that could not have been “promoted” within the
meaning of the section 1956(a)(2)(A) by the international
transfers listed in the indictment, and it does not generate
“proceeds” with the meaning of sections
1956(a)(1)(A)(ii) and (a)(1)(B)(i). Def.'s Mot. at 2, 8,
this contention is inconsistent with the text of the statute,
which begins with the unequivocal prohibition: “[n]o
person shall act as an agent of a foreign
principal.” 22 U.S.C. § 612(a) (emphasis added).
It is a crime to “act” “unless” one
has registered - the statute does not simply state that the
failure to register is unlawful. And while defendant is
correct that FARA does not prohibit being a foreign agent,
undertaking activities on behalf of a foreign client, or
“acting” as a foreign agent per se, it
is illegal to act as an undisclosed foreign agent. The
statute gives a person ten days after becoming an agent to
register, after which time, acting as an undisclosed agent
for that foreign principal is prohibited. See id.;
see also 22 U.S.C. § 618(g) (also making it
“unlawful for any person to act as an agent of
a foreign principal at any time ten days or more after”
receiving notice that his or her registration statement does
not comply with the statute) (emphasis added).
suggests that the heading of section 612, which is entitled
“Registration statement, ” confirms that he has
properly characterized FARA as a reporting statute that does
not criminalize “acting” as a foreign agent.
Def.'s Reply at 2-3. He cites INS v. Nat'l Ctr.
for Immigrants' Rights, 502 U.S. 183 (1991) for the
basic proposition that a court may rely on statutory headings
to “aid in resolving an ambiguity in the
legislation's text.” Def.'s Reply at 3, citing
502 U.S. at 189. But here, there is no ambiguity in the text
also points to the fact that Congress included a provision in
Title 18, the Crimes and Criminal Procedure section of the
U.S. Code, that prohibits acting as a foreign agent under
certain circumstances, and he submits that this demonstrates
that the FARA statute was aimed solely at registration.
Def.'s Mot. at 4-5, citing 18 U.S.C. § 951. Section
951 of Title 18 states that “[w]hoever, other than a
diplomatic or consular officer or attaché, acts in the
United States as an agent of a foreign government without
prior notification to the Attorney General” shall be
fined or imprisoned for up to ten years, or both. 18 U.S.C.
§ 951(a). According to defendant, this statute
criminalizes acting as a foreign agent, whereas FARA
is merely a “regulatory scheme for foreign agent
registration” that criminalizes only the willful
failure to register. Def.'s Mot. at 5, quoting United
States v. McGoff, 831 F.2d 1071, 1075 (D.C. Cir. 1987).
reference to section 951 does not support defendant's
position, since defendant acknowledges that section 951
plainly governs acting as an agent of a foreign government,
and the language of the two provisions is quite similar.
See Def.'s Mot. at 4-5; compare 18
U.S.C. § 951(a) (“Whoever . . . acts in the United
States as an agent of a foreign government without prior
notification to the Attorney General . . . shall be fined
under this title or imprisoned . . . .”) with
22 U.S.C. § 612(a) (“No person shall act as an
agent of a foreign principal unless he has filed with the
Attorney General a true and complete registration statement .
. . .”) and id. § 618(a) (imposing
criminal penalties on any person who “willfully
violates any provision of this subchapter or any regulation
thereunder” or “willfully makes a false statement
of a material fact or willfully omits any material
fact” in a FARA statement). These laws are not just
about paperwork; their object is to ensure that no person
acts to advance the interests of a foreign government or
principal within the United States unless the public has been
properly notified of his or her allegiance. So both statutes
expressly prohibit “acting” as a representative
of a foreign entity without submitting the required
notification to the Attorney General. For these reasons, the
alleged international banking transactions could
“promote, ” and Manafort could realize
“proceeds” from, a FARA violation.
it is difficult to square defendant's argument that a
violation of FARA is an act of omission that cannot be
“promoted” or generate “proceeds”
with the meaning of the money laundering statute when
Congress specifically amended the money laundering statute to
add FARA violations to the list of predicate offenses.
See USA PATRIOT Act of 2001, Pub. L. No. 107-56,
tit. III, § 315, 115 Stat. 272, 308-309 (2001); 18
U.S.C. § 1956(c)(7)(D) (defining “specified
unlawful activity” to include “any felony
violation of the Foreign Agents Registration Act of
1938”); see also H.R. Rep. No. 107-250, pt. 1,
at 55 (2001) (explaining that the Act expanded “the
list of foreign crimes that can lead to money laundering
prosecutions in this country when the proceeds . . .
are laundered in the United States, ” and that it was
“intend[ed] . . . to send a strong signal that the
United States will not tolerate the use of its financial
institutions for the purpose of laundering the
proceeds of such activities”) (emphases added).
Defendant asserts that this amendment is not instructive
since section 1956(c)(7) incorporates ...