Christopher Hines v. Drew

Filing

UNPUBLISHED AUTHORED OPINION filed. Originating case number: 2:12-cv-01890-MGL. Copies to all parties and the district court/agency. [999706942]. [14-6969]

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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 14-6969

CHRISTOPHER REGINALD HINES,
Petitioner - Appellant,
v.
WARDEN DREW,
Respondent - Appellee.

Appeal from the United States District Court for the District of
South Carolina, at Charleston.
Mary G. Lewis, District Judge.
(2:12-cv-01890-MGL)

Argued:

September 15, 2015

Decided:

November 25, 2015

Before NIEMEYER, GREGORY, and THACKER, Circuit Judges.

Affirmed by unpublished opinion.
Judge Gregory wrote
opinion, in which Judge Niemeyer and Judge Thacker joined.

the

ARGUED: Joel
Morris
Bondurant,
Jr.,
BONDURANT
LAW
FIRM,
Atlanta, Georgia, for Appellant. Anthony Joseph Enright, OFFICE
OF THE UNITED STATES ATTORNEY, Charlotte, North Carolina, for
Appellee. ON BRIEF: Jill Westmoreland Rose, Acting United
States
Attorney,
OFFICE
OF
THE
UNITED
STATES
ATTORNEY,
Charlotte, North Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

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GREGORY, Circuit Judge:
Christopher Reginald Hines pleaded guilty to two offenses
stemming

from

appeal,

Hines

an

extensive

argues

that

mortgage
his

money

fraud

conspiracy.

laundering

On

conspiracy

conviction must be reversed under United States v. Santos, 553
U.S. 507 (2008), and thus, that the district court erred in
denying his petition for a writ of habeas corpus under 28 U.S.C.
§ 2241.

We disagree.

Because we find no merger problem under

Santos, we affirm the district court’s denial of Hines’s § 2241
petition.

I.
A.
A

grand

jury

in

the

Western

District

of

North

Carolina

returned a second superseding indictment that charged Hines with
eleven

counts

related

to

his

investment

scheme.

Count

one

charged Hines with conspiracy to commit offenses against the
United States in violation of 18 U.S.C. § 371, including making
a false statement in connection with a loan, 18 U.S.C. § 1014;
mail fraud, 18 U.S.C. § 1341; wire fraud, 18 U.S.C. § 1343; and
bank fraud, 18 U.S.C. § 1344.

Counts two through five charged

Hines with substantive mail fraud offenses occurring on four
specific dates in 2001.

Counts six through eight charged Hines

with substantive bank fraud offenses occurring on three specific
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dates in 2000 and 2001.

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Counts nine and ten charged Hines with

wire fraud offenses occurring on two specific dates in 2000.
Count

eleven

charged

Hines

with

conspiracy

to

commit

money

laundering in violation of 18 U.S.C. § 1956(h).
Following his indictment, Hines pleaded guilty to one count
of conspiracy to commit offenses against the United States in
violation

of

18

U.S.C.

§ 371

(Count

One)

and

one

count

of

conspiracy to commit money laundering in violation of 18 U.S.C.
§ 1956(h) (Count Eleven).
counts.

The government dismissed all other

The convictions stemmed from Hines’s leadership of a

mortgage fraud scheme from March 2000 until September 2001.

The

scheme involved multiple coconspirators, at least two of whom
pleaded guilty to various offenses.
In

his

plea

agreement,

Hines

admitted

that

he

and

his

coconspirators created several entities, referred to as “Mega
Group” entities, to facilitate the conspiracy.

Through those

entities, Hines recruited buyers with good credit to purchase
various properties.

He offered the buyers to become real estate

investors with no money down, earning cash on each home that
they

purchased.

To

lull

the

buyers,

ownership of the properties easy:

Hines

offered

to

make

buyers were told that they

would not be responsible for any mortgage payments, that Mega
Group entities would place renters in the properties, and that
the Mega Group entities would be responsible for the renters and
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any payments they failed to make.

Hines claimed that the Mega

Group entities would eventually sell the properties, splitting
the profit with the buyers.
Unbeknownst to the buyers, the Mega Group entities bought
the properties shortly before the buyers, and then “flipped” the
property to the buyer, making money off each transaction.
and

his

coconspirators

arranged

for

the

buyers

to

Hines

purchase

multiple properties within a short time frame, to prevent the
earlier sales from appearing on their credit reports.

After a

short period of time during which mortgage payments were made by
the Mega Group entities to induce the buyers to purchase more
than one “investment property,” the Mega Group entities stopped
making mortgage payments, eventually causing the mortgage loans
to

become

delinquent.

Ultimately,

many

of

the

investment

properties went into foreclosure.
To

perpetrate

the

scheme,

Hines

falsified

the

loan

applications.

Although the buyers supplied accurate information

to

Group

the

Mega

entities,

Hines

and

his

coconspirators

misrepresented the buyers’ income, falsely indicated that the
buyers were purchasing the property as a residence, and made it
appear as though the buyers had sufficient funds to cover the
down payment.
In total, Hines and his coconspirators defrauded at least
100 individual buyers in North Carolina, along with numerous
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mortgage lenders throughout the United States.

The mortgage

loans that they fraudulently obtained exceeded $23 million.
B.
Hines stipulated to the factual basis for his guilty plea.
The

“Stipulation

to

Factual

Basis”

states,

“With

respect

to

Count One,” Hines “was aware that false information regarding
the source of down payments was contained in HUD-I Settlement
Statements in which Mega Group and its related companies were
sellers, and that this information was being sent to potential
lender

financial

institutions.”

J.A.

84.

The

stipulation

further states that, “With respect to Count Eleven,” Hines “was
aware

[that]

at

least

a

portion

of

the

proceeds

from

loans

involved in Count One were used to facilitate other financial
transactions to further or promote the conspiracy charged in
Count One.”

Id.

At his Rule 11 hearing, Hines affirmed to the magistrate
judge that “[w]ith respect to Count [Eleven], [he] was aware
that at least a portion of the proceeds from loans involved in
Count One were used to facilitate other transactions to further
or

promote

During

the

the

plea

conspiracy
colloquy,

charged
the

in

Count

magistrate

One.”

judge

J.A.

94.

specifically

asked Hines, “[I]s this a true statement and do you affirm this
statement

at

this

time?”

Id.

Hines

stated,

“Yes.”

Id.

Further, at the plea proceeding, the government proffered that,
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with respect to Count One, Hines and his coconspirators used the
Mega

Group

entities

to

purchase

real

estate

value before selling it to the buyers.
difference
profit.”

between

the

J.A. 92.

purchase

and

and

inflate

its

Hines then took the

the

sale

price

“as

a

With respect to Count Eleven, the government

proffered that “some of the proceeds . . . that were received in
the profits” from the transactions “were then used to make the
mortgage payments on behalf of the buyers and also used to make
. . . down payments on behalf of the buyers.”
the

government’s

Hines,

“[D]o

factual

you

proffer,

understand

the

both

J.A. 70.

magistrate

what

I

judge

said

After
asked

and

[the

government] said to expand upon it are the charges to which
you’re pleading guilty . . . ?”
The

district

court

Id.

sentenced

Hines stated, “Yes.”
Hines

to

a

Id.

term

of

imprisonment of 188 months, which included a term of 60 months
on Count One and a term of 188 months on Count Eleven, to be
served concurrently.
C.
After unsuccessful appeals, Hines filed a habeas petition
in which he argued that the savings clause of 28 U.S.C. § 2255
applied

and

that

his

money

laundering

conspiracy

conviction

should be invalidated in light of Santos on the ground that the
government failed to show that the transactions underlying the
money laundering conspiracy conviction involved the profits of
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unlawful

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activity.

Hines

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claimed

that

the

transactions

supporting his money laundering conspiracy conviction were the
same

transactions

furtherance
“merger

of

listed

the

problem.”

in

the

mortgage
The

indictment

fraud

district

as

conspiracy,

court

found

overt

acts

leading

that

to

Santos,

in
a
as

interpreted by United States v. Halstead, 634 F.3d 270 (4th Cir.
2011), and United States v. Cloud, 680 F.3d 396 (4th Cir. 2012),
was

inapplicable

offenses.

because

it

did

not

apply

to

conspiracy

Hines then filed a motion for reconsideration under

Federal Rule of Civil Procedure 59(e), which the district court
denied.

Hines timely appealed.

II.
We review de novo a district court’s grant or denial of a
writ of habeas corpus on questions of law.
Brown, 155 F.3d 431, 434 (4th Cir. 1998).
over this appeal under 28 U.S.C. § 1291.

United States v.

We have jurisdiction

Id. at 433.

III.
Applying Santos, Hines contends that the money laundering
conspiracy merges into the mortgage fraud conspiracy, as the
same transactions support convictions for both crimes.

He thus

claims that Santos requires that the money laundering conspiracy
statute be construed narrowly so as to apply only to the “net
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profits” of the mortgage fraud conspiracy.

Hines asserts that

because the government did not prosecute the money laundering
conspiracy statute in his case narrowly, as required by Santos,
his money laundering conspiracy crime merged with the mortgage
fraud conspiracy, requiring that the money laundering conspiracy
conviction be vacated.
Count

[Eleven]

of

As he argues, “[my] conviction under

the

indictment

simply

cannot

stand.

The

financial transactions charged therein are entirely duplicative
of the financial transactions that form the basis for the Count
[One] conviction. . . .

In light of the plain and undeniable

overlap in the underlying financial transactions charged in both
counts, the two conspiracy charges . . . ‘obviously merged.’”
Appellant’s Br. at 29-30 (quoting United States v. Crosgrove,
637 F.3d 646, 655 (6th Cir. 2011)).
Setting aside the issues of appellate waiver, see United
States v. Archie, 771 F.3d 217, 223 (4th Cir. 2014), and actual
innocence

of

the

dismissed

charges,

see

Bousley

v.

United

States, 523 U.S. 614, 623-24 (1998), we find no merger problem.
A.
To assess Hines’s claim on appeal, it is first necessary to
put his argument in context by briefly discussing the Supreme
Court’s Santos

decision

Halstead and Cloud.

and

our

application

of

that

case

in

Hines was convicted of money laundering

conspiracy under 18 U.S.C. § 1956(h).
8

To prove money laundering

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conspiracy,

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the

government

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was

required

to

show

(1)

the

existence of an agreement between two or more persons to commit
one

or

more

of

the

substantive

money

laundering

offenses

proscribed under 18 U.S.C. § 1956(a) or § 1957; (2) that the
defendant

knew

that

the

money

laundering

proceeds

had

been

derived from an illegal activity; and (3) that the defendant
knowingly and voluntarily became part of the conspiracy.
States

v.

Singh,

518

F.3d

236,

248

(4th

Cir.

2008)

United
(citing

United States v. Alerre, 430 F.3d 681, 693 (4th Cir. 2005)).

At

the time of the transactions at issue here, the statute provided
no definition of “proceeds.” 1
In Santos, a divided Supreme Court grappled with alternate
definitions of “proceeds” as either “receipts” or “profits” of a
crime.
the

553 U.S. 507.

Court

(plurality

adopted
opinion).

Citing the rule of lenity, a plurality of
the

“profits”
The

definition.

plurality

further

Id.
noted

at

514

that

the

“receipts” interpretation would create a “merger problem” for
statutes such as the illegal gambling statute, 18 U.S.C. § 1955,

1

Congress amended the money laundering statute in May 2009;
that amendment effectively overruled Santos, defining proceeds
to include “gross receipts.” Fraud Enforcement and Recovery Act
of 2009, Pub.L. No. 111–21, § 2(f)(1), 123 Stat. 1617, 1618
(2009) (codified at 18 U.S.C. § 1956(c)(9)).
Nevertheless,
because the amendment was not enacted at the time of the conduct
giving rise to Hines’s convictions, this expanded definition of
“proceeds” does not apply in this case.

9

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at issue in Santos itself:

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“If ‘proceeds’ meant ‘receipts,’

nearly every violation of the illegal-lottery statute would also
be a violation of the money-laundering statute, because paying a
winning

bettor

is

a

transaction

involving

receipts

that

the

defendant intends to promote the carrying on of the lottery.”
Id. at 515 (plurality opinion).
Justice Stevens, concurring, disagreed with the plurality’s
broad application of the rule of lenity and focused instead on
the merger issue.
Justice

Stevens

With respect to the illegal gambling statute,
stated

that

“[t]he

revenue

generated

by

a

gambling business that is used to pay the essential expenses of
operating that business is not ‘proceeds’ within the meaning of
the

money

laundering

statute,”

because

“[a]llowing

the

Government to treat the mere payment of the expense of operating
an

illegal

gambling

business

as

a

separate

practical effect tantamount to double jeopardy.”
(Stevens, J., concurring).

offense

is

in

Id. at 527-28

Justice Stevens suggested, however,

that the Court “need not pick a single definition of ‘proceeds’
applicable to every unlawful activity,” thereby implying that
the “profits” definition is only warranted in the context of
crimes creating such merger problems.

Id. at 525 (Stevens, J.,

concurring).
In United States v. Halstead, we considered the reach of
Santos in the context of a defendant convicted of healthcare
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fraud and money laundering.

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634 F.3d 270.

Halstead’s fraud

convictions arose from his scheme to capitalize on his patients’
healthcare benefits by making phony medical diagnoses.
272-73.

Id. at

His money laundering conviction, by contrast, arose

from his transfer of the illicit gains into his personal bank
account.

Id. at 280-81.

He claimed that Santos prohibited his

money laundering conviction because transferring his ill-gotten
gains

into

his

own

bank

accounts

constituted

expense of operating his healthcare fraud.
To

resolve

Halstead’s

exactly, Santos held.

argument

we

an

essential

Id.
first

examined

what,

Relying on Marks v. United States, 430

U.S. 188 (1977), we interpreted Santos narrowly to bind lower
courts

only

predicate

in

for

cases
the

where

illegal

defendant’s

Halstead, 634 F.3d at 278-79.

gambling

money

constituted

laundering

the

conviction.

But, because the merger problem

provided the “driving force” behind both the plurality’s and
Justice Stevens’s opinions, we recognized that Santos compelled
us

to

construe

the

money

laundering

statute

so

as

punishing a defendant twice for the same offense.
concluded
laundering

that

a

merely

defendant
“for

cannot

paying

operating’ the underlying crime.”
553

U.S.

at

528

(Stevens,

J.,

the

be

convicted

‘essential

to

avoid

Id.
of

We
money

expenses

of

Id. at 279 (citing Santos,
concurring).

But

if

“the

financial transactions of the predicate offense are different
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from the transactions prosecuted as money laundering” no merger
problem arises.
Applying

Id. at 279–80.

this

rule

to

Halstead,

we

held

that

problem tainted his money laundering conviction.
fraud

was

“complete”

healthcare

as

soon

reimbursements.

as

Id.

he
at

merger

His healthcare

received
280.

no

the

ill-gotten

Transferring

these

reimbursements into his own account thereafter constituted an
altogether

“separate”

offense

that

prosecuted as money laundering.

the

government

properly

Id.

We again had occasion to apply Santos in United States v.
Cloud, a case involving strikingly similar facts as these.
F.3d 396.

680

Cloud’s scheme, at its essence, involved convincing

people to invest in real estate properties that, unbeknownst to
the buyers, Cloud had recently purchased for a lesser amount.
Id. at 399–400.

The scheme also involved falsification of loan

applications

and

kickbacks

buyers,

to

the

payment
at

of

least

“thousands

one

mortgage

of

dollars

broker,

recruiters responsible for finding the buyers.”

and

in
the

Id. at 400.

Cloud was convicted of several crimes, including, as is relevant
here, one count of conspiracy to commit money laundering, one
count

of

mortgage

laundering.

fraud

Id. at 399.

conspiracy,

and

six

counts

of

money

The substantive counts all concerned

various payments Cloud made “to recruiters, buyers, and other
coconspirators for the role each person played in the mortgage
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fraud

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scheme.”

Id.

at

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406.

On

appeal,

we

reversed

those

convictions, finding that they suffered from the merger problem
identified in Santos.

Id. at 408.

We concluded that, unlike

the payments in Halstead, the charged transactions were payment
of “the ‘essential expenses’ of the underlying fraud” because it
was only through the promise of these payments that Cloud was
able to persuade his coconspirators to do business with him.
Id. at 406–08.

That the payments were made after the services

were performed did nothing to change that.

Id. at 408.

In

order to correct the merger problem, we defined “proceeds” as
“profits,” as the Santos Court had done, and reversed the money
laundering convictions on that basis.

Id. at 409.

On the other hand, we found no merger problem with Cloud’s
conviction
“[u]nlike

for

conspiracy

Cloud’s

to

substantive

commit
money

money

laundering

laundering

because

charges,

the

conspiracy charge was not tied to any specific payment to a
recruiter, buyer, or coconspirator” and “there was evidence that
Cloud

used

the

profits

from

finance additional purchases.”
the conspiracy conviction.

his

previous

Id. at 408.

[illegal

deals]

to

Thus, we affirmed

Id.
B.

Because Hines was not convicted of operating an illegal
gambling business, we must determine whether a merger problem
arises on the facts of this case.
13

See Halstead, 634 F.3d at 279

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(noting

that

addressing

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“Justice

that

Pg: 14 of 16

Stevens’s

situation

on

opinion
a

. . .

case-by-case

would

require

approach”

and

“leav[ing] further development of a solution to a future case
that presents the problem”).
We

have

repeatedly

held

that

if

“‘the

financial

transactions of the predicate offense are different from the
transaction prosecuted as money laundering’ no merger problem
arises.”

United States v. Simmons, 737 F.3d 319, 324 (4th Cir.

2013) (quoting Halstead, 634 F.3d at 279-80).

Hines stipulated

to a factual basis supporting his guilty plea to Counts One and
Eleven in the second superseding indictment.

That stipulation

states, with respect to the money laundering conspiracy count,
that Hines “was aware th[at] at least a portion of the proceeds
from loans involved in Count One were used to facilitate other
financial

transactions

charged in Count One.”
Hines

admitted,

underlying

his

at

his

money

to

further

or

promote

the

conspiracy

J.A. 84 (emphasis added).
plea

hearing,

laundering

that

conspiracy

the

Further,

transactions

conviction

are

different from those underlying the mortgage fraud conspiracy
conviction.
In

addition,

Hines

agreed

with

the

government’s

proffer

that during the conspiracy period, he used the “profits” from
his previous flips to make down payments on future properties.
In utilizing monies from previous properties to finance future
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purchases, Hines was not paying the “essential expenses” of the
underlying crime.
Hines’s
claim.

See Cloud, 680 F.3d at 408.

admissions,

therefore,

are

fatal

to

his

Santos

See id. (“In utilizing monies from previous properties

to finance future purchases, Cloud was not paying the ‘essential
expenses’ of the underlying crime.
commit

money

problem.”);

laundering
Halstead,

count]

634

F.3d

Thus, [the conspiracy to

does

not

at

279-80

present
(“But

a

merger

when

the

financial transactions of the predicate offense are different
from the transactions prosecuted as money laundering, the merger
problem recognized in Santos does not even arise.”).

Thus, the

merger problem never arises in the circumstances of this case,
and Santos provides Hines no relief. 2

2

Hines’s reliance on United States v. Crosgrove, 637 F.3d
646 (6th Cir. 2011), is misplaced.
Crosgrove was hired as a
claims adjuster and attorney in a fraudulent insurance scheme.
Id. at 655.
Crosgrove was indicted for conspiracy to commit
mail fraud, in violation of 18 U.S.C. § 371, and conspiracy to
commit money laundering, in violation of 18 U.S.C. § 1956(h).
Id. at 650-51.
Crosgrove stood trial on both counts and was
convicted. Id. at 652. On appeal, the government conceded that
the “only transactions on which the conviction” for conspiracy
to launder money “could be upheld were Crosgrove’s deposits of
checks” that amounted to “salary payments” to him. Id. at 65455.
The Sixth Circuit held that the “crimes as charged
obviously merge” because “the payments Crosgrove received for
his services as an attorney and claims adjuster, which the
Government states are the only basis for upholding Crosgrove’s
conviction for conspiracy to commit money laundering, are also
listed in the indictment as overt acts in furtherance of the
mail/wire fraud conspiracy.”
Id. at 655.
Crosgrove, however,
(Continued)
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IV.
For

the

reasons

stated,

the

district

court’s

denial

of

Hines’s § 2241 petition is
AFFIRMED.

is easily distinguishable from the case at issue, because here,
Hines explicitly agreed that the transactions supporting his
money laundering conspiracy conviction were different from those
underlying his conviction under 18 U.S.C. § 371.

16