## Facts

- Denise Braxtonbrown-Smith owned Psychological Development Associates (PDA) and operated Better Treatment Centers (BTC), a Medicaid-funded day-treatment program for adults with intellectual disabilities.
- PDA obtained a Medicaid provider number and began receiving clients in early 1994 through referrals from a District of Columbia agency, billing Medicaid a daily per-client rate.
- Before BTC, PDA was financially distressed; by late 1994, Medicaid reimbursements exceeded $400,000 and BTC accounted for nearly all of PDA’s income.
- Trial evidence showed Braxtonbrown-Smith used Medicaid reimbursements paid to PDA for personal purposes, failed to pay taxes on that money, and sought loans using false documentation.
- The government charged, among other offenses, that she engaged in money laundering by conducting financial transactions using funds characterized as proceeds of Medicaid fraud and related unlawful activity.
- A jury in federal district court convicted her on multiple counts including fraud-related offenses, money laundering, and tax offenses; she appealed both conviction and sentence.

## Issues

1. Whether the evidence was insufficient for money laundering because the government did not trace specific funds used in the charged transactions to unlawful proceeds.
2. Whether any alleged failure of proof on “proceeds” required reversal of other related convictions.
3. Whether the jury instructions on money laundering and related offenses were legally erroneous and required reversal.
4. Whether sentencing was erroneous, including Guidelines calculations, delegation of restitution payment scheduling to probation, and inclusion of past-due income taxes within the sentence/restitution structure.

## Decision

- The D.C. Circuit affirmed the convictions, including the money laundering counts.
- The court held the evidence allowed a reasonable jury to find the charged transactions involved proceeds of unlawful activity without requiring tracing of specific dollars.
- The court rejected challenges to the jury instructions when viewed as a whole under the applicable standards of review.
- The court remanded for correction of the sentence and clarification of the restitution order, including improper delegation of payment scheduling and the handling of past-due income taxes.

## Legal Principles

- For federal money laundering, the government need not prove the identity of particular “dirty” dollars if the evidence permits a reasonable inference that the property involved in the transaction was derived from specified unlawful activity.
- Circumstantial evidence about the defendant’s financial context, including dominant sources of incoming funds and their use in charged transactions, can support a finding that the funds were criminal proceeds.
- A restitution order must set essential payment terms by judicial determination; the court may not delegate core scheduling decisions (timing and amounts) to the Probation Office.
- When a sentence addresses tax-related obligations, the order must be structured and specified with sufficient clarity to distinguish and properly implement criminal restitution and tax payment components.

## Conclusion

The court upheld Braxtonbrown-Smith’s fraud, tax, and money laundering convictions, concluding that circumstantial proof supported the “proceeds” element without strict tracing, but it remanded to correct and clarify the restitution and tax-payment aspects of the sentence and to ensure payment scheduling decisions were made by the court.


United States v. Braxtonbrown-Smith, 278 F.3d 1348 (D.C. Cir. 2002)