FSM SUPREME COURT TRIAL DIVISION
Cite as FSM v. Weilbacher 24 FSM R. 32 (Pon. 2023)
FEDERATED STATES OF MICRONESIA,
Plaintiff,
vs.
LUKNER WEILBACHER and MARTIN JANO
Defendants.
CRIMINAL CASE NO. 2020-501
MEMORANDUM OF DECISION
Larry Wentworth
Associate Justice
Trial: January 10-13, 2023
Decided: January 17, 2023
Memorialized: January 26, 2023
APPEARANCES:
For the Plaintiff:
Jeffrey S. Tilfas, Esq.
Quintina Letawerpiy, Esq.
Assistant Attorneys General
FSM Department of Justice
P.O. Box PS-105
Palikir, Pohnpei FM 96941
For the Defendant:
Bethwell O'Sonis, Esq.
(L. Weilbacher)
Office of the Public Defender
P.O. Box 814
Weno, Chuuk FM 96942
For the Defendant:
Tevita T. Muloilagi, Esq.
(R. Weilbacher)
Office of the Public Defender
P.O. Box 814
Weno, Chuuk FM 96942
For the Defendant:
Nathaniel Linglemog, Esq.
(M. Jano)
Office of the Public Defender
P.O. Box 106
Colonia, Yap FM 96943
* * * *
A person commits the crime of conspiracy, if, with intent to promote or facilitate the commission of a national crime, he or she agrees with one or more persons that they, or one or more of them will engage in or solicit the conduct or will cause or solicit the result specified by the crime's definition; and he or another person with whom he conspired commits an overt act in pursuance of the conspiracy. A conspiracy exists when either the agreement or the means contemplated for its achievement is unlawful. FSM v. Weilbacher, 24 FSM R. 32, 34-35 (Pon. 2023).
A conspiratorial agreement does not have to be explicit; a mere tacit understanding will suffice, and there need not be any written statement or even a speaking of words which expressly communicates the agreement, and it is not necessary to prove the specific terms or the specific scope of the conspiratorial agreement or to prove that the conspiracy's substantive object was actually accomplished. FSM v. Weilbacher, 24 FSM R. 32, 35 (Pon. 2023).
The existence of, and participation in, a criminal conspiracy may be proved by circumstantial as well as by direct evidence, if it affords a reasonable inference about the ultimate facts sought to be proved. FSM v. Weilbacher, 24 FSM R. 32, 35 (Pon. 2023).
To be theft under 11 F.S.M.C. 602, the property must be the property of another. There is no statutory requirement that it be government property. But when an information's language is more specific than the language of the statute under which the crime is charged, the prosecution must establish those specific facts alleged in the information in addition to a violation of the statute. FSM v. Weilbacher, 24 FSM R. 32, 35 (Pon. 2023).
When the prosecution pled, and therefore had to prove, that the defendants conspired to commit theft of funds that are national government property, but when the prosecution has manifestly proven that those funds were not ever national government property because it proved that the FSM was not entitled to and never had possession of any of those funds, actually or constructively, the taking of ship registration fees by an unlawful ship registry was not the theft of government property but was theft of the shipowners' property, the defendants will be acquitted of those charges. FSM v. Weilbacher, 24 FSM R. 32, 35-36 (Pon. 2023).
Characterizing the fees collected by an unlawful open ship registration scheme as the shipowners' property, and not national government property, would not deprive the court of jurisdiction in the matter because the thefts were carried out in the national government's name and with a claim of authority from the national government, thus making the thefts otherwise a crime against the Federated States of Micronesia under 11 F.S.M.C. 104(7)(a)(ii) and because it would fall under the national court's exclusive jurisdiction over admiralty and maritime matters. FSM v. Weilbacher, 24 FSM R. 32, 36 (Pon. 2023).
When all ship registry fees collected by an unlawful open ship registry were the proceeds of serious crimes, one co-conspirator's undisputed possession of the proceeds would be more than enough to meet the element of an overt act by one of the co-conspirators to further the money-laundering conspiracy. FSM v. Weilbacher, 24 FSM R. 32, 36 (Pon. 2023).
A conspiracy-to-commit-money-laundering charge does not require that each conspirator actually possess proceeds of the serious crime to establish criminal liability for the conspiracy. FSM v. Weilbacher, 24 FSM R. 32, 36 (Pon. 2023).
When a defendant possessed some proceeds of the serious crime (a $100,000 check) and tried to give it to the FSM as the FSM's "share" of the fees that an unlawful ship registry had collected, and when this occurred not only after the defendant had been informed that the registry scheme was unlawful but also after the defendant had advised a co-conspirator that he should cease some operations because what he was doing was illegal, any doubt, reasonable or otherwise, that the $100,000 was part of the proceeds of a serious crime was eliminated. Also eliminated was any viability of the 11 F.S.M.C. 203(7) affirmative defense that the defendant had made a complete and voluntary renunciation of the scheme and withdrew from the conspiracy because, by later presenting the check to the FSM, the defendant was still acting in furtherance of the conspiracy. FSM v. Weilbacher, 24 FSM R. 32, 36 (Pon. 2023).
The term "money laundering" can mean making dirty money (crime proceeds) clean. FSM v. Weilbacher, 24 FSM R. 32, 36 (Pon. 2023).
When there is insufficient evidence to prove beyond a reasonable doubt that there was an agreement that only if an entity agreed to compensate an official's son would the official then authorize the entity's business, which was what the statute requires under the facts alleged in the information, the defendant will be acquitted on the exerting-special-influence count. FSM v. Weilbacher, 24 FSM R. 32, 37 (Pon. 2023).
* * * *
LARRY WENTWORTH, Associate Justice:
This memorandum memorializes the court's decision made from the bench on January 17, 2023, at the conclusion of trial. The decision embodies the court's general findings and conclusions of law. Co-defendant Suniel K. Sharma was severed at the start of trial due to his continued absence from the jurisdiction. Co-defendant Renwick Weilbacher was acquitted when his Rule 29 motion was granted after the close of the prosecution's case-in-chief.
Defendant Lukner Weilbacher, in Count 121, and defendant Martin Jano, in Count 122, are both charged with conspiring with severed co-defendant Suniel K. Sharma to commit theft through the collection of fees for the registration of foreign vessels under the FSM flag in an open ship registry (the Micronesian International Ship Registry or MISR) that Sharma, or one of his companies, operated in the FSM's name.
A person commits the crime of conspiracy, if, with intent to promote or facilitate the commission of a national crime, he agrees with one or more persons that they, or one or more of them will engage in or solicit the conduct or will cause or solicit the result specified by the crime's definition; and he or another person with whom he conspired commits an overt act in pursuance of the conspiracy. Engichy v. FSM, 15 FSM R. 546, 558 (App. 2008). A conspiracy exists when either the agreement or the means contemplated for its achievement are unlawful. Lee v. Kosrae, 20 FSM R. 160, 166 (App. 2015); FSM v. Mumma, 21 FSM R. 387, 400 (Kos. 2017); FSM v. Este, 12 FSM R. 476, 483 (Chk. 2004). The conspiratorial agreement does not have to be explicit; a mere tacit understanding will suffice, and there need not be any written statement or even a speaking of words which expressly communicates the agreement. Cholymay v. FSM, 17 FSM R. 11, 23 (App. 2010). It is not necessary to prove the specific terms or the specific scope of the conspiratorial agreement or to prove that the conspiracy's substantive object was actually accomplished. Id. The existence of, and participation in, a criminal conspiracy may be proved by circumstantial as well as by direct evidence, if it affords a reasonable inference about the ultimate facts sought to be proved. Id.
In this case, Weilbacher, Jano, and Sharma agreed that an open international ship registry should be set up for the FSM and set about trying to accomplish this. An open ship registry is unlawful under FSM law, which only permits a closed ship registry, where vessels can be registered only by qualified FSM persons, 19 F.S.M.C. 301(1), who are either FSM citizens; FSM-citizen corporations; persons, including corporations, with FSM national government foreign investment permits and with their principal place of business in the FSM; or FSM governments, 19 F.S.M.C. 302(1). (MISR was an unlawful enterprise. There were other unlawful aspects to the MISR ship registry, but for our purposes this is the important one.)
Sharma was able to set up and operate MISR and register 103 ineligible vessels and collect registration fees from their owners because of Secretary of Transportation, Communication and Infrastructure ("TC&I") Lukner Weilbacher's October 2, 2015 letter of intent that was written to authorize MISR's operation and which Sharma used to implement the MISR scheme.
Counts 121 and 122 charge that the collection of these foreign ship registration fees by the unlawful ship registry (MISR) set up by Sharma constituted theft under 11 F.S.M.C. 602 and that this theft of fees was the theft of national government property because only the FSM national government can register vessels and collect fees for the registration. It is conceded that under FSM law none of the vessels registered by MISR were eligible for FSM ship registration or to fly the FSM flag.
To be theft under 11 F.S.M.C. 602, the property must be the property of another. There is no statutory requirement that it be government property. But when an information's language is more specific than the language of the statute under which the crime is charged, the prosecution must establish those specific facts alleged in the information in addition to a violation of the statute. Lee v. Kosrae, 20 FSM R. 160, 165-66 (App. 2015); FSM v. Boaz (I), 1 FSM R. 22, 24 (Pon. 1981).
The prosecution therefore had to prove in this case that the defendants conspired to commit theft of national government property; in other words, that the money collected by MISR in its admittedly illegal and unlawful ship registration scheme was national government property. The prosecution, however, has manifestly proven that those funds were not ever national government property. The prosecution proved that the FSM was not entitled to any of the funds Sharma collected because none of the ships that paid MISR registration fees could lawfully be registered to fly the FSM flag. The FSM national government therefore could not lawfully collect or possess any of those fees.
Even if those ships could have been lawfully registered in the FSM registry, the FSM government never had possession of any of those funds, actually or constructively, and so, just as not paying taxes is not the crime of theft of government property but the crime of tax evasion, FSM v. Arnold, 23 FSM R. 557, 574 (Chk. 2022), the taking of the MISR ship registry fees was not the theft of government property but was theft of the shipowners' property. The FSM was well aware that it was not entitled to any of those funds. It even rejected a $100,000 check that was part of those funds because it was not entitled to those funds.
The court is not saying that there was no theft here or no conspiracy to commit theft. The theft was from the 103 shipowners. They paid registration fees to MISR and did not get what they paid for – a valid FSM ship registration. It should be apparent that these funds were not national government property, and that if the FSM had been able to seize those funds and if the funds were subject to restitution, those funds probably would have been returned to the shipowners.
The court further notes that characterizing the MISR fees as the shipowners' property, and not national government property, would not have deprived the court of jurisdiction in this matter because the thefts were carried out in the national government's name and with a claim of authority from the national government, thus making the thefts otherwise a crime against the Federated States of Micronesia under 11 F.S.M.C. 104(7)(a)(ii) and because it would fall under the national court's exclusive jurisdiction over admiralty and maritime matters.
Accordingly, since the prosecution cannot prove that the object of the theft was national government property, the court must acquit Weilbacher on the charge in Count 121 and Jano of the charge in Count 122.
As an aside here, because of the court's ruling today that the thefts were of the shipowners' property, not the FSM national government's property, the prosecution may be advised to consider filing a superseding information for the charges against Sharma so that it does not run into this same problem when prosecuting him.
Count 123 charges Martin Jano with conspiring with Sharma to collect money from the unlawful registration of numerous vessels and that those funds were proceeds of a serious crime, all in violation of the money laundering statute, 11 F.S.M.C. 918. The general finding on this count is guilty.
All ship registry fees collected by MISR (and including seafarer's identification book fees) were the proceeds of serious crimes. A conspiracy to commit money laundering charge does not require that each conspirator actually possess proceeds of the serious crime to establish criminal liability for the conspiracy – Sharma's undisputed possession of the proceeds would be more than enough to meet the element of an overt act by one of the co-conspirators to further the conspiracy. (The creation of MISR would also suffice.)
However, in this case, defendant Jano did possess some proceeds of the serious crime. The most salient occasion was Jano's possession of the $100,000 check from MISR that Jano tried to give to the FSM as the FSM's "share" of the ship registry fees that MISR had collected. This is particularly telling because it occurred not only after Jano had been informed that the MISR scheme was unlawful but also after Jano had advised Sharma that he should cease some operations because what he was doing was illegal. By then, any doubt, reasonable or otherwise, that the $100,000 was part of the proceeds of a serious crime was eliminated. It also eliminates any viability of the 11 F.S.M.C. 203(7) affirmative defense, which was raised during closing argument, that Jano made a complete and voluntary renunciation of the scheme and withdrew from the conspiracy. By later presenting the check to the FSM, Jano was still acting in furtherance of the conspiracy.
This would be an instance of what the general public thinks of when it hears the term "money laundering" – making dirty money (crime proceeds) clean. If the FSM had accepted the $100,000 payment by check, Sharma could then argue that the FSM had retroactively ratified his MISR activities thus not only validating MISR's previous unlawful acts and activities, but also making the revenue, the money, MISR generated "clean." The FSM was probably wise to reject the $100,000 check.
Count 485 charges the then TC&I Secretary Lukner Weilbacher with violating the conflict of interest statute, 11 F.S.M.C. 512, by willingly participating in Sharma's scheme to create an open international ship registry (MISR) for the FSM, while at the same time knowing that, if MISR operated on Pohnpei, MISR would continue to compensate his son, Renwick Weilbacher, for continuing services and for possible additional future services rendered for MISR.
The court's general finding on this count is guilty.
Count 486 charges that then TC&I Secretary Lukner Weilbacher with exerting special influence, in violation of 11 F.S.M.C. 521(1), by agreeing that his son, Renwick Weilbacher, would receive pecuniary benefit as consideration for his unlawful approval, as TC&I Secretary, of the MISR scheme. The court finds that there is insufficient evidence to prove beyond a reasonable doubt that there was such an agreement that only if MISR agreed to compensate Secretary Lukner Weilbacher's son would the Secretary then authorize MISR, which is what the statute requires under the facts alleged in Count 486. Weilbacher is therefore acquitted on this count.
Both Jano and Weilbacher are acquitted of the conspiracy to commit theft of national government property charges because no government property was involved. Jano is found guilty on the conspiracy to commit money laundering charge. Weilbacher is found guilty on the conflict of interest charge and acquitted on the exertion of special interest charge.
* * * *