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United States v. Van Alstyne

United States Court of Appeals for the Ninth Circuit

March 9, 2009, Argued and Submitted, Pasadena, California; October 22, 2009, Filed

No. 07-50105

Opinion

 [*807]  BERZON, Circuit Judge:

Lance Van Alstyne appeals his conviction for money laundering and the sentence imposed by the district court following a limited remand. After Van Alstyne filed his appeal to this court but before briefing, the Supreme Court decided United States v. Santos, 553 U.S. 507, 128 S.Ct. 2020, 170 L. Ed. 2d 912 (2008), which addressed -- with less than clear results, as will appear -- the meaning of the money laundering statute.

Van Alstyne now argues that Santos requires us to reverse his money laundering conviction. We agree in part. We hold that Santos undermines our earlier approach to determining whether funds arising from a specified illegal activity constitute "proceeds"  [**2] for the purposes of the money laundering statute, 18 U.S.C. § 1956, and requires a reversal of Van Alstyne's money laundering conviction for two of the three money laundering counts. As to the third count, we affirm the conviction as consistent with Santos. We agree with Van Alstyne that the district court erred in calculating the enhancement to the money laundering sentence under U.S.S.G. § 2S1.1, in determining his fraud offense level under U.S.S.G. § 2F1.1(b)(1), and in imposing the restitution requirement, and so remand for reconsideration of those portions of Van Alstyne's sentence.

FACTS AND PROCEDURAL BACKGROUND

Van Alstyne defrauded approximately 450 victims through a Ponzi scheme involving a number of companies that he organized for that purpose. The fraudulent scheme, begun in 1992, was built around thirteen oil and gas limited partnerships. [*808]  These partnerships, LEM Pacific Income Fund I-IV, Sandstone Gas Fund I-V, and American Gas Fund I-IV, were controlled by Van Alstyne. Other companies he owned or controlled, Liberty Energy Management and Sabre Asset Management, served as the general partners for the limited partnerships. Continental Mineral Acquisitions and Blake Energy  [**3] Corporation, two acquisition companies also owned by Van Alstyne, purchased oil and gas properties on behalf of the limited partnerships.

Van Alstyne perpetuated the scheme by selling interests in the limited partnerships to elderly and retired investors. Victims were solicited by brokers from Coastline Financial and Merchant Banking Services, both of which were, at the time, broker/dealers registered with the National Association of Securities Dealers (NASD). 1 Van Alstyne required the brokers to adhere to a script that described a safe investment with a more than ten percent annual return, backed by AAA-rated government bonds. Only after making their initial investments did the victims receive a printed prospectus disclosing that the investments were in fact risky and that losses could result from fluctuations in oil and gas prices. Nonetheless, because victims received distribution checks shortly after making their initial investments, they believed they had invested wisely and often re-invested when contacted by brokers. In reality, the distribution checks were largely funded not by oil and gas revenues but by the investors' own principal. 2 

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584 F.3d 803 *; 2009 U.S. App. LEXIS 23330 **

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. LANCE VAN ALSTYNE, Defendant-Appellant.

Subsequent History: Appeal after remand at, Decision reached on appeal by United States v. Van Alstyne, 2013 U.S. App. LEXIS 4170 (9th Cir. Cal., Feb. 28, 2013)

Prior History:  [**1] Appeal from the United States District Court for the Central District of California. D.C. No. CR-98-00118-AHS-1. Alicemarie H. Stotler, District Judge, Presiding.

United States v. Van Alstyne, 143 Fed. Appx. 45, 2005 U.S. App. LEXIS 16236 (9th Cir. Cal., 2005)

CORE TERMS

sentence, money laundering, investors, proceeds, funds, plurality, counts, Guidelines, mail fraud, district court, profits, gross receipts, merger, enhancement, restitution, financial institution, calculating, lottery, checks, refunds, distributions, convicted, limited partnership, restitution order, predicate crime, receipts, monthly, clarified, nominal, unlawful activity

Criminal Law & Procedure, Racketeering, Money Laundering, General Overview, Banking Law, Elements, Appeals, Reviewability, Commencement of Criminal Proceedings, Double Jeopardy, Law of the Case, Remand & Remittitur, Governments, Courts, Judicial Precedent, Fraud Against the Government, Mail Fraud, Standards of Review, Clear Error Review, De Novo Review, Abuse of Discretion, Sentencing Guidelines, Adjustments & Enhancements, Sentencing, Plain Error, Restitution