## Facts

- Robert L. Johnson operated an investment fraud in which he claimed he could buy Mexican pesos at a discount and resell them for large weekly returns, citing purported Mexican government connections.
- Investors were told they could earn roughly 15–25% profit per week and were instructed to wire funds to Johnson’s account at a savings and loan in Broken Arrow, Oklahoma.
- After receiving investor wires, Johnson sent payments back to investors labeled as profits, which encouraged additional and larger investments.
- Evidence showed millions of dollars were deposited into Johnson’s account over a little more than a year.
- The government treated the incoming investor wires, outgoing payments to investors, and Johnson’s expenditures (including home mortgage payments and a Mercedes purchase) as financial transactions involving proceeds of wire fraud.
- Johnson was indicted on 63 counts under the Money Laundering Control Act (18 U.S.C. §§ 1956, 1957); a jury convicted him on all but one count, and he received a 405-month sentence.

## Issues

1. Whether evidence supported “promotion” money laundering under 18 U.S.C. § 1956(a)(1)(A)(i) based on Johnson’s use of fraud proceeds to pay his mortgage and buy a luxury car.
2. Whether incoming investor wires and outgoing payments to investors were financial transactions involving “criminally derived property” or “proceeds” of specified unlawful activity under 18 U.S.C. §§ 1956 and 1957.
3. Whether the government had to trace the precise source of funds used in particular transactions when the account contained commingled funds.
4. Whether the district court committed reversible error in applying the Sentencing Guidelines in calculating Johnson’s sentence.

## Decision

- The Tenth Circuit largely affirmed Johnson’s convictions and 405-month sentence.
- The court held there was sufficient evidence that mortgage payments and the Mercedes purchase could be found to promote the ongoing wire-fraud scheme.
- The court upheld convictions based on transfers into and out of Johnson’s account, concluding the evidence permitted a finding that the transactions involved proceeds of wire fraud.
- The court rejected arguments requiring exact tracing of dollars through a commingled account where substantial evidence showed the account was funded by fraudulent deposits.
- The court affirmed the sentencing determination, finding the district court’s loss-related and guideline findings supported by the record.

## Legal Principles

- “Intent to promote” under 18 U.S.C. § 1956(a)(1)(A)(i) may be shown when expenditures of fraud proceeds help sustain, perpetuate, or expand an ongoing fraudulent enterprise, including by reinforcing an appearance of success that attracts or reassures victims.
- Transactions induced by and occurring within a continuing fraud scheme can qualify as financial transactions involving “proceeds” or “criminally derived property” under 18 U.S.C. §§ 1956 and 1957.
- When an account is substantially funded with criminal proceeds, the government may prove the proceeds element through circumstantial evidence, bank records, and testimony; it need not trace each dollar with mathematical precision despite commingling.
- Appellate review of guideline applications and related factual findings is deferential; a sentence will be affirmed when the record supports the district court’s determinations.

## Conclusion

The court affirmed that money-laundering statutes reach financial transactions tied to an ongoing fraud, including lifestyle and “lulling” payments that a jury can reasonably view as promoting the scheme, and it allowed proceeds to be proven without exact dollar-by-dollar tracing where evidence showed the account was funded primarily by fraudulent deposits.


United States v. Johnson, 971 F.2d 562 (10th Cir. 1992)