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Whether this court views the district court’s action as a
choice between guidelines or a departure, the result is the
same. The heartland analysis that should be applied prior to
determining which guideline applies is identical to the
analysis that should be applied in determining whether a
departure is warranted. See Smith, 186 F.3d at 298.
Moreover, in the departure context, this court has held that the
fact that a money laundering offense involved proceeds
related to unlawful activity other than drug trafficking or
organized crime is not sufficient to take the offense outside of
the heartland of the money laundering guideline. United
States v. Reed, 167 F.3d 984, 995 (6th Cir. 1999); United
States v. Ford, 184 F.3d 566, 587 (6th Cir. 1999). Thus, even
if the district court’s decision is treated not as a departure but
as an application of a more appropriate guideline, the district
court’s rationale was not sufficient to warrant the lower
court’s decision not to apply the money laundering guideline
to the money laundering offense. Accordingly, the district
court’s sentence should be reversed and remanded with
instructions to re-sentence Chilingirian in accordance with the
money laundering guideline.
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The Third Circuit has since clarified the holding of Smith:
Where money laundering is not ‘minimal or incidental,’
and is ‘separate from the underlying crime’ and intended
to ‘make it appear that the funds were legitimate’ or to
funnel money into further criminal activities, § 2S1.1 is
an applicable guideline. The guideline may also be
applicable if there is evidence that the activities which
fulfilled the broad statutory requirements for money
laundering were extensive with drug trafficking or other
serious crime.
United States v. Mustafa, 238 F.3d 485, 495 (3d Cir. 2001)
(quoting United States v. Bockius, 228 F.3d 305, 313 (3d Cir.
2000)). In this case, it could also be argued that even if this
Circuit were to apply Smith, its rationale would fail to
produce the result desired by Chilingirian. The money
laundering in this case was not minimal nor incidental, and it
appears to have been funneled through the client trust account
in order to make it appear legitimate and to further the radar
technology/fraud scheme.
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This portion of the Guidelines Manual has since been
amended so that the sentencing court is now required to use
the guideline that Appendix A says is applicable. See
U.S.S.G., Appendix A (2000). Thus, the Smith approach is
no longer relevant.
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IDEXORXV Chilingirian also reassured RWKHUs that he was
working on several deals.
In mid-1995, Chilingirian attempted to settle all of the
bankruptcy claims against VRSS and the Rashids with money
available from a group of investors known as the "Tindall
Group." Paul Tindall, and his wife Ann Louise, lived in
Canada and were related to Jack Rashid’s wife. The Tindalls
met with Jack Rashid in January 1995. In late June 1995, the
Rashids went to Toronto to present their technology to, and

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seek investments from, a group of over thirty people who
learned of this opportunity through Paul Tindall.
In December 1995, Advanced Radar Systems ("ART") was
incorporated in Canada in order to take in the money from the
Canadian investors. Neither the Rashids nor Chilingirian
informed the Canadian investors about VRSS’s bankruptcy or
their plan to use the investors’ money to pay creditors. The
Canadians invested heavily, but the money was put into
VRSS. According to the government’s summary, the records
of Chilingirian’s client trust fund show that $2.48 million in
checks was given to Jack Rashid by ART-Canada investors.
Chilingirian endorsed $2.267 million of those checks into his
trust account. Chilingirian then wrote $275,000 worth of
checks to himself, gave $1.473 million to Jack Rashid, and
disbursed $480,000 to settle various investors’ claims against
Rashid. Aside from Peter Tindall, none of the Canadian
investors have ever recouped any money invested with the
Rashids.
When Chilingirian incorporated ART in Canada on behalf
of Jack Rashid, he opened a new client trust account as well.
According to the government, this account was used to
launder money received from the last group of investors, the
"Kraft Group." James Kraft was a long time friend of Jack
Rashid. He was solicited for money in April 1996, and
invested money from his retirement account. He also brought
in contributions from over thirty other investors.
In 1996, Chilingirian and members of the Rudder Group
discussed settlement of the investors’ claims against the
Rashids/VRSS. Some investors did get a portion of their
money back, but they had to sign affidavits exculpating Jack
Rashid. Similarly, despite numerous complaints from
investors, Chilingirian continued to deposit money from the
Kraft Group into his client trust account, then withdraw some
for Jack Rashid and a lesser amount for himself.
On April 23, 1997, Chilingirian was indicted on charges of
conspiracy in violation of 18 U.S.C. § 371, mail fraud in
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E. Fraud Guideline or Money Laundering Guideline?
The government, on cross-appeal, argues that the district
court erred by sentencing Chilingirian according to the fraud
guidelines, rather than the money laundering guidelines.
Chilingirian was found guilty of conspiracy to commit money
laundering and Jack Rashid pleaded guilty to the same
offense. However, Judge O’Meara sentenced the defendants
according to different sentencing guidelines. He sentenced
Jack Chilingirian according to the sentencing guideline for
fraud (§ 2F1.1) and sentenced Jack Rashid according to the
sentencing guideline for money laundering (§ 2S1.1). The
fraud guideline results in a significantly lower offense level.
The government argues that the court should have applied the
guidelines for money laundering to Chilingirian.
This is a case of first impression in this circuit.
Chilingirian and the district court rely on case law from the
Third Circuit. In United States v. Smith, 186 F.3d 290 (3d
Cir. 1999), the Third Circuit held that the money laundering
guidelines were too harsh to apply to what it described as a
routine fraud case in which the money laundering activity was
an "incidental by-product" of a kick-back scheme. Id. at 300.
The court explained that the sentencing court must perform a
"heartland" analysis when deciding what guideline should be
applied and when deciding whether to depart. See id. at 298.
Thus, in order to determine whether the money laundering
guideline should apply, the court had to determine what
conduct was considered by the Sentencing Commission to fall
within the heartland cases covered under the money
laundering guideline. The court considered the Sentencing
Commission’s proposed amendments to the money
laundering guideline, which were rejected by Congress, and
"conclude[d] that the Sentencing Commission itself has
indicated that the heartland of U.S.S.G. § 2S1.1 is the money
laundering activity connected with extensive drug trafficking
and serious crime." Id. at 300.

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violation of 18 U.S.C. § 1341, wire fraud in violation of 18
U.S.C. § 1343, aiding and abetting the interstate
transportation of funds taken by fraud in violation of 18
U.S.C. § 2314, tampering with a witness in violation of 18
U.S.C. § 1512, and conspiracy to launder money instruments
in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i),
1956(a)(1)(B)(i), and 1956(h).
On April 29, 1999, the district court convicted Chilingirian
of conspiracy to commit money laundering. On October 8,
1999, Chilingirian filed a Motion and Brief requesting bail
pending appeal. On October 18, 1999, &KLOLQJLULDQ¶VUHTXHVW
IRU EDLO ZDV GHQLHG DQG he was sentenced to 37 months
imprisonment, 2 years supervised release, and restitution in
the amount of $335,167.50. 2QDSSHDO&KLOLQJLULDQDUJXHV
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II. STANDARD OF REVIEW
This court reviews a district court's denial of bail under an
abuse of discretion standard. /HHY-DEH)G
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