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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 91-5625
_____________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
RICHARD CRUZ BREQUE,
Defendant-Appellant.
_________________________________________________________________
(June 15, 1992)
Appeal from the United States District Court
for the Western District of Texas
_________________________________________________________________
Before HILL,* KING, and DAVIS, Circuit Judges.
KING, Circuit Judge:
Richard Cruz Breque appeals his conviction for conspiracy in
violation of 18 U.S.C. з 371, 18 U.S.C. з 1956(a)(3), and 31
U.S.C. зз 5313 and 5322(a). He also appeals his sentence. We
affirm his conviction on all counts but vacate his sentence.
I. STATEMENT OF THE CASE
We address the facts of this case in some detail. As a
result of various investigations by the San Antonio branches of
the Internal Revenue Service ("IRS") and the United States
Customs Service, the authorities suspected that Breque and others
* James C. Hill, Senior Circuit Judge, Eleventh Circuit,
sitting by designation.

were laundering unreported currency through El Centenario, a
money exchange business in Laredo, Texas. Lucila Rangel, a
special agent with the IRS, contacted Breque with money
laundering proposals. Rangel called herself "Lucy Moreno," and
told Breque that she was a representative of a Miami organization
in need of money exchange services.
On June 6, 1989, Rangel telephoned Breque and asked if he
would exchange $20,000 for pesos. Breque agreed to do so for a
10% commission. Rangel remarked that the rate was very high, to
which Breque responded that he charged that much "because of the
way things are." Rangel finally assented to Breque's terms and
the two agreed to meet on June 8 at a Denny's Restaurant in
Laredo to finalize the deal.
On June 8, 1989, Rangel drove to the Denny's Restaurant and
arrived at the scheduled time. Breque and an associate, Michael
Zuniga, arrived half an hour later and informed Rangel that the
three would drive together in Rangel's car to a nearby
restaurant, called the Unicorn. When the group entered the
Unicorn, Breque arranged for them to sit in a private section.
Following lunch, Rangel informed Breque and Zuniga that she had
only $15,000. The news upset Breque and he left the table to
make a phone call. When he returned, he explained that the
people he was dealing with had backed out of the transaction. He
suggested, however, that the three should simply divide the
$15,000 between them and exchange the portions individually.
Rangel rejected this proposal, prompting Breque to assure her
2

that a man named George Enriquez would join them shortly and
would resolve the matter.
Enriquez arrived at the Unicorn a few minutes later and
announced that the necessary pesos were being gathered. At that
point, Breque remarked that if there were any papers to complete,
he and Enriquez would do so later on. Enriquez grimaced in
response and said "oh, no, no, no." Breque then said "okay" and
Rangel said "okay." Rangel's interpretation of the discussion
was that they had agreed not to file the required Currency
Transaction Report ("CTR")1 with respect to the $15,000 exchange.
The group then drove to the El Centenario money exchange.
Breque directed them to a back room of the business and
introduced them to Carlos Castiglioni. Rangel removed $15,000 in
cash from a camera case and placed it on Castiglioni's desk.
Castiglioni counted the money on a machine and handed Rangel a
large sum of pesos. No one asked Rangel for any of the
information necessary to complete a CTR, and no CTR was filed
relating to that transaction. Following the deal at El
Centenario, the group returned to the Denny's Restaurant and
Rangel paid Breque $1,500 for his services in arranging the
exchange.
On June 15, 1989, Rangel telephoned Breque and they agreed
to meet on June 20 in San Antonio to exchange $40,000 for pesos.
Breque told Rangel that he would come to her hotel room, pick up
1 A Currency Transaction Report must be filed with the IRS
when the amount of the exchange exceeds $10,000. See 31 C.F.R.
з 103.22(a)(1) (1991).
3

her money, and then drive to a secret highway intersection, where
an unnamed person would meet him to make the exchange.
Afterwards, he would return to her hotel room with the pesos.
During the same phone call, Rangel mentioned that a suspicious
looking car had followed them on the day of the June 8 meeting,
to which Breque replied:
I don't think, I don't think it was uh, you know, I
don't think it was anything federal or anything. I
think it was just a bunch of guys that maybe thought we
were, we had too much and maybe they wanted a little
bit.
Rangel later interpreted those remarks for the jury as indicating
that Breque "didn't think it was any federal agents or anything.
He just thought it was maybe a rip off."
The meeting on June 20, 1990, took place at the Embassy
Suites Hotel in San Antonio, and was recorded by a hidden video
camera. Due to a misunderstanding between Breque and Rangel, and
because Castiglioni could not supply the required pesos, no
transaction occurred that day. During the meeting, Rangel made
veiled references to drug dealing and the parties discussed
illegal money laundering. Discussing various money laundering
techniques, Rangel criticized the "old, worn out method" of
taking money to a "friendly person." Breque agreed that the
"friendly banker" method would no longer work because "[t]hey're
4

all getting burned that way."2 The discussion progressed as
follows:
[Breque:] [L]ike I was . . . telling Mike, one of the
things that's really gotten this thing very bad is all
your TV movies, Miami Vice and everything that's making
everybody kinda jittery, things the way are going . . .
[Rangel:] yeah, and especially when, like I said,
things get, things are getting warm
[Breque:] Uh huh
[Rangel:] in Florida right now. You know, and along
the East . . .
[Breque:] Yeah, it's strange, all of a sudden, it just
kinda started goin', I guess they didn't like selling
the boats and cars and everything.3 Now they want to
get some more money out some place else and it's kinda
dumb, it's stupid
[Rangel:] well, they just, you know, they told me, you
scout, go West (laughs) and find something. Find a way
[Breque:] you know
[Rangel:] because our people are getting very nervous
down there. The people that we normally do business
with . . .
[Breque:] Uh hum
[Rangel:] You know, are very nervous and, and
2 At trial, Rangel explained that, in money laundering
jargon, the "friendly banker . . . is a banker who will sort of
wink at the reporting requirements and sort of let it slide and
take the currency into the bank without filing the proper forms."
Rangel further stated that Breque's comment "they're all getting
burned that way," referred to the fact that "there has been a lot
of enforcement activity involving banks and those CTR filing
requirements."
3 Rangel explained at trial that "Miami Vice was a
television program about narcotics interdiction and about people
getting arrested and for dealing drugs." She further explained
that Breque's statement that "they didn't like selling the boats
and cars" was a reference to the seizure of vehicles and vessels
used in narcotics trafficking.
5

[Breque:] a lot, everybody's nervous.
In the course of the conversation, Breque claimed that he owned
two offshore corporations and that he could easily handle
$500,000 at a time. He also boasted that he had influence with
the Prime Minister of Bermuda, and advised Rangel that she should
consider opening a bank account there. Breque joked at one point
about the possibility that Rangel was a law enforcement officer:
"I mean, you're not going to put somebody in jail over there if
you were who, who you might be, I hope not. I'm going to knock
on wood on that one."4
Several times during the week after the June 20 meeting
Breque telephoned Rangel with various proposals relating to money
laundering. On June 27, 1989, Rangel returned one of Breque's
calls and they arranged to meet on July 6 at La Posada hotel in
Laredo to exchange $60,000 for pesos. Castiglioni testified at
trial that he and Breque worked together on the details of the
July 6 deal. Finding $60,000 in pesos was not easy, however. As
of the morning of July 6, the pair had obtained only $30,000
worth of pesos and Castiglioni was therefore forced to drive to
Mexico to pick up the remaining half.
4 Breque defended his language at this meeting by explaining
that he believed he had unwittingly stumbled into the company of
"gangsters," and that to avoid being killed as a potential
informant he pretended to be a gangster himself. Thus, Breque
used expressions like "friendly banker" because they made his
performance more realistic. In fact, he said, he had learned of
that euphemism in a newspaper article, not through real life
experience. Similarly, he testified that the line about offshore
corporations had popped into his head because he had heard it in
the movie "Lethal Weapon II."
6

That afternoon, Breque and Castiglioni met Rangel and
another agent, Ruiz, at the hotel and exchanged the $60,000 for
pesos. Following the exchange, Rangel paid Breque a 6╜%
commission. Again, no one asked Rangel for information necessary
to complete a CTR, and no CTR was filed. Castiglioni admitted at
trial that he made no effort to acquire this information and
stated that he knew at the time that everyone concerned wished to
avoid the CTR filing.
Following the July 6 transaction, Castiglioni met directly
with Rangel and Ruiz on October 11, 1989, November 15, 1989, and
January 24, 1990. On each occasion, they exchanged United States
currency for pesos, and Castiglioni did not report the
transactions. During the first meeting, Ruiz informed
Castiglioni that their clients were "traffickers" who needed
"money cleaned." During the second meeting, Castiglioni
announced that he would charge an additional 2% fee for his
services because of the dangers involved with laundering drug
money. During the third meeting, the parties again discussed the
illegal source of the funds.
On June 26, 1990, Rangel phoned Castiglioni and they agreed
that Castiglioni would meet Ruiz and another undercover agent for
a $100,000 "emergency" exchange of pesos. This time, Castiglioni
insisted on a 5% fee. Castiglioni also informed Rangel that he
was working with Breque again, and that Breque would assist him
with the planned transaction. At trial, Castiglioni testified
that Breque advised him to increase his fee to 5% because the
7

"service that we were providing was worth a lot more for these
people." The Government cross-examined Castiglioni on the
subject of the services rendered as follows:
[Government:] The service you were providing was worth
a lot more than the two percent that you were charging?
[Castiglioni:] Correct.
[Government:] But you were providing the service that
you provide to anybody who walked into El Centenario.
Right?
[Castiglioni:] Yes.
[Government:] I mean if I came in with a hundred -- you
might have trouble getting it together on the spot, but
if I came in with a hundred thousand dollars and wanted
to exchange it, you'd do it with me, wouldn't you, at
that time, if you could put it together?
[Castiglioni:] Yes, but I have to file a form.
[Government:] But you have to file a form. That's the
service you're providing is not filing a form, and also
-- but you had been dealing with these people and not
filing a form and not charging them five percent for
quite some time. Right?
[Castiglioni:] Correct.
[Government:] But just like you said to Agent Ruiz,
it's got to be more. It's got to be at least two
percent because you people are saying that you're drug
dealers. You got to expect that, so Mr. Breque is
advising that because of the service you're providing,
not just the exchange and not just failing to file a
form, because of who you're dealing with
[Castiglioni:] Correct
[Government:] -- you're going to charge more. Right?
Right?
[Castiglioni:] Correct.
When Breque and Castiglioni arrived at La Posada hotel on the
afternoon of June 28, federal officers placed them under arrest.
8

Following a jury trial in the United States District Court
for the Western District of Texas, Breque was convicted of
conspiring with Castiglioni and Enriquez to fail to file CTRs in
violation of 18 U.S.C. з 371 and 31 U.S.C. зз 5313 and 5322(a).5
In addition, Breque was convicted of conspiring with Castiglioni
to launder money represented by a law enforcement officer to be
the proceeds of specified unlawful activity (narcotics sales), in
violation of 18 U.S.C. з 1956(a)(3)(C).
Pursuant to United States Sentencing Guidelines ("U.S.S.G.")
з 2S1.1, the district court sentenced Breque to a term of
imprisonment of fifty-five months, to be followed by a three-year
term of supervised release. He was also charged $10,000 in fines
and a $100 special assessment. This appeal followed.
III. DISCUSSION
A.
Pursuant to 31 U.S.C. з 5313(a) and 31 C.F.R.
з 103.22(a)(1), financial institutions must file CTRs with the
IRS when they engage in individual currency transactions
exceeding $10,000. A person who "willfully" violates the above
provisions commits an offense under 31 U.S.C. з 5322(a). See,
e.g., United States v. Gollott, 939 F.2d 255, 257 (5th Cir.
1991). Though the primary responsibility for filing CTRs rests
with the agents of the financial institution, "a customer's
collusion with a financial institution to avoid filing CTRs . . .
5 Castiglioni pleaded guilty to this crime prior to Breque's
trial.

9

constitutes an unlawful conspiracy in violation of 18 U.S.C.
з 371." United States v. Cure, 804 F.2d 625, 628 (11th Cir.
1986) (citations omitted).
Breque contends that the evidence is insufficient to convict
him of conspiracy to fail to file CTRs in violation of 18 U.S.C.
з 371 and 31 U.S.C. зз 5313 and 5322(a). We note that the
evidence against Breque was sufficient to convict him if "any
rational trier of fact could have found the essential elements of
the crime beyond a reasonable doubt." United States v.
Contreras, 950 F.2d 232, 236 (5th Cir. 1991) (citing United
States v. Lemons, 941 F.2d 309, 314 (5th Cir. 1991)), cert.
denied, 60 U.S.L.W. 3798 (1992). We review the evidence "in the
light most favorable to the government, drawing all reasonable
inferences in favor of the jury's verdict." Id.
We find that there is evidence showing that Breque willfully
conspired with Castiglioni and Enriquez to fail to file the CTRs,
because he knew of the reporting requirements and decided not to
comply with them. See United States v. O'Banion, 943 F.2d 1422,
1429 (5th Cir. 1991). On June 8, 1989, Breque met with Rangel
and discussed exchanging her $15,000 for pesos. Breque
apparently understood the $10,000 filing requirement because he
recommended that he, Rangel, and Zuniga divide her $15,000 and
exchange the portions individually. Breque subsequently
introduced Rangel to Castiglioni who effected the exchange.
Castiglioni did not file a CTR, and made no inquiries of Rangel
so that he could have done so. While Breque contends that he
10

merely stood idly by and watched Castiglioni make the exchange,
it is undisputed that he introduced Rangel and Castiglioni for
the purpose of exchanging currency.
The conversation at the Unicorn, during which Breque
inquired as to whether he should file forms (and subsequently
assented to Enriquez' refusal to do so) demonstrates that Breque
knew of the reporting requirements, yet nevertheless agreed not
to file a CTR. Furthermore, as the Government points out, the
manner in which the exchange was arranged -- backroom meetings,
mysterious cars, a 10% commission for Breque's services --
suggests that the participants were aware that their activities
were illegal. At one point, Breque assured Rangel that the car
following them was "not federal or anything." At the June 20
meeting, Breque lectured Rangel as to money laundering
techniques, and joked about the possibility that she was a law
enforcement officer. Breque arranged for the second unreported
currency exchange with Castiglioni and received 6╜% commission.
Finally, Breque helped Castiglioni plan the $100,000 unreported
transaction that led to their arrest.
A rational jury could have found that the evidence proved
all elements of the crime. Sufficient evidence therefore
supported Breque's conviction for conspiracy to fail to file
CTRs.
B.
Breque also contends that the evidence was insufficient to
convict him of conspiring with Castiglioni to violate
11

з 1956(a)(3)(C). 18 U.S.C. з 1956(a)(3) provides, in relevant
part, as follows:
(3) Whoever, with the intent --
. . . .
(C) to avoid a transaction reporting requirement
under State or Federal law,
conducts or attempts to conduct a financial transaction
involving property represented by a law enforcement
officer to be the proceeds of specified unlawful
activity, or property used to conduct or facilitate
specified unlawful activity, shall be fined under this
title or imprisoned for not more than 20 years, or
both. For purposes of this paragraph . . . the term
"represented" means any representation made by a law
enforcement officer or by another person at the
direction of, or with the approval of, a Federal
official authorized to investigate or prosecute
violations of this section.
18 U.S.C. з 1956(a)(3)(C). Subsection (c)(7) defines "specified
unlawful activity" to include a wide range of crimes, including
violations of the narcotics laws. 18 U.S.C. з 1956(c)(7). To
prove a violation of this section, the Government must prove (1)
that the defendant conducted or attempted to conduct a financial
transaction, (2) with the intent to avoid a transaction reporting
requirement, and (3) that the property involved in the
transaction was represented by a law enforcement officer to be
the proceeds of specified unlawful activity. 18 U.S.C.
з 1956(a)(3)(C).
Prong one of the test is uncontested, and our analysis above
satisfies prong two. Only prong three, whether a law enforcement
officer represented that the currency presented for exchange was
the proceeds of unlawful activity, is at issue.
12

Breque argues that the Government is trying to hold him
responsible for revelations made by Rangel to Castiglioni after
Breque left the alleged conspiracy. On October 11, 1989, Rangel
explicitly told Castiglioni that her Miami clients were
"traffickers" who needed "money cleaned." Later, Castiglioni
stated that he would increase his fee because of the dangers
involved in exchanging drug money.
We recognize that Rangel never explicitly informed Breque
that the dollars were the proceeds of drug activity. She did,
however, allude to it strongly. During their June 20 discussion,
Rangel told Breque that "my people down in . . . Florida wanted
me to ask you some things, uh, we've got kind of a problem . . .
we've got a lot of money coming in," which they needed to put
"into a useable form." Rangel also stated that "things are
getting pretty warm in Florida right now," to which Breque
responded that the television show "Miami Vice," a show about
narcotics dealing, "made everybody kinda jittery." Breque also
opined that law enforcement agents were no longer satisfied
"selling the boats and cars and everything," referring to the
seizure of items used in drug trafficking. While Rangel's
language with Breque may have been ambiguous (unlike her express
representations to Castiglioni) to a layman, Breque's responses
reveal that Breque understood her comments to mean that the
currency came from drug trafficking activity. Furthermore, on
June 28, 1990, Breque joined Castiglioni to plan the $100,000
transaction which led to their arrest. Just prior to the
13

scheduled transaction, Breque advised Castiglioni to charge a 5%
commission because of the dangers of dealing with drug dealers.
This, too, indicates that Breque understood Rangel to mean that
her funds derived from drug-related activities.
We find that there is sufficient evidence from which a jury
might conclude that Rangel represented to Breque that the funds
were the proceeds of drug activities. A rational jury could have
found Breque guilty of conspiracy to violate 18 U.S.C.
з 1956(a)(3)(C).
C.
Breque next contends that the district court erred when it
instructed the jury as to "deliberate ignorance."6 The term
"deliberate ignorance" "denotes a conscious effort to avoid
positive knowledge of a fact which is an element of an offense
charged, the defendant choosing to remain ignorant so he can
plead lack of positive knowledge in the event he should be
caught." See United States v. Chen, 913 F.2d 183, 191-92 (5th
6 The instruction reads as follows:
The word "knowingly," as that term has
been used from time to time in these
instructions, means that the act was done
voluntarily and intentionally, not because of
mistake or accident.
You may find that a defendant had
knowledge of a fact if you find that the
defendant deliberately closed his eyes to
what would otherwise have been obvious to
him. While knowledge on the part of the
defendant cannot be established merely by
demonstrating that the defendant was
negligent, careless, or foolish, knowledge
can be inferred if the defendant deliberately
blinded himself to the existence of a fact.
14

Cir. 1990) (quoting United States v. Restrepo-Granda, 575 F.2d
524, 528 (5th Cir.), cert. denied, 439 U.S. 935 (1978)); see also
United States v. Lara-Velasquez, 919 F.2d 946, 951 (1976).
Because Breque did not object to this instruction at trial,
we review it for plain error.7 See Fed. R. Crim. P. 52(b).
According to Rule 52(b), "[p]lain errors or defects affecting
substantial rights may be noticed although they were not brought
to the attention of the court." This court has defined "plain
error" as "error which, when examined in the context of the
entire case, is so obvious and substantial that failure to notice
and correct it would affect the fairness, integrity or public
reputation of judicial proceedings." United States v. Lopez, 923
F.2d 47, 50 (5th Cir.), cert. denied, 111 S.Ct. 2032 (1991).
This circuit applies a two-part test in deciding whether the
district court erred in giving a "deliberate ignorance"
instruction. Lara-Velasquez, 919 F.2d at 952. First, evidence
at trial, viewed in the light most favorable to the Government,
must show that the defendant was subjectively aware of a high
probability of the existence of the illegal conduct. Second, the
evidence must show that the defendant purposely contrived to
avoid learning of the illegal conduct. Id. The purpose of this
test is clear: if there is no evidence indicating the defendant
7 Breque notes that he objected to the "deliberate
ignorance" instruction in his motion for a new trial. That
objection was not contemporaneous, however, and therefore the
plain error standard still applies. See United States v. Winn,
948 F.2d 145, 159 (5th Cir. 1991) (objection to jury instruction
after jury deliberates is not contemporaneous and is reviewed for
plain error), cert. denied, 112 S.Ct. 1599 (1992).
15

subjectively knew his act to be illegal, a deliberate ignorance
instruction "poses the risk that a jury might convict the
defendant on a lesser negligence standard -- the defendant should
have been aware of the illegal conduct." Id. at 951 (emphasis in
original).
As to the CTR offense, Breque contends that the instruction
was wrongly given because the "jury may well have concluded that
the Government was only obligated to prove that Breque should
have known of the reporting requirements." We disagree. As we
discussed earlier, the jury was presented with considerable
evidence that Breque, in fact, knew of the reporting
requirements. Indeed, in the conversation at the Unicorn, Breque
specifically raised the issue. The instruction could not have
misled the jury as to the proper standard to apply.
Breque also contends, in somewhat oblique fashion, that the
instruction may have confused the jury into concluding that it
could convict Breque of violating 18 U.S.C. з 1956(a)(3) if it
found that he should have known the money to have been from
specified unlawful activity, even absent proof by the Government
that a representation was made by Rangel as to the source of her
funds. This contention, too, has no merit. As we have noted
above, for purposes of з 1956(a)(3), the Government put forth
sufficient evidence that Rangel made representations to Breque
that the money was proceeds of specified unlawful activity. The
instruction in no way suggested that the Government need not have
proven that Rangel made a representation. Indeed, the jury
16

instruction which dealt specifically with 18 U.S.C. з 1956(a)(3)
made clear to the jury that the Government had to prove that
Rangel made a representation. Accordingly, there was no error in
giving the deliberate ignorance instruction.
D.
Over Breque's objections at sentencing, the district court
raised Breque's base offense level by three levels pursuant to
U.S.S.G. з 2S1.1(b)(1). At the time Breque was sentenced, that
section provided as follows:
If the defendant knew that the funds were the proceeds
of an unlawful activity involving the manufacture,
importation, or distribution of narcotics or other
controlled substances, increase by 3 levels.
U.S.S.G. з 2S1.1(b)(1) (Nov. 1990) (emphasis added). We review
the district court's application of the Sentencing Guidelines de
novo, see United States v. White, 945 F.2d 100, 101 (5th Cir.
1991), but review the district court's factual findings only for
clear error. United States v. Bachynsky, 949 F.2d 722, 734 (5th
Cir. 1991).
Breque argues that the money was not the proceeds of an
unlawful activity because it was Government "sting" money. As
such, he reasons, he could not "know" the funds to be the
proceeds of unlawful activity. To "know" a fact, he suggests,
implies the existence or truth of that fact. The plain language
of the section, he concludes, precludes its application to his
case.8
8 Breque also argues that з 2S1.3(b)(1) should apply rather
than з 2S1.1(b)(1). This argument ignores the fact that the
17

According to the Government, however, for a defendant to
"know" that funds are the proceeds of unlawful activity requires
only that the defendant be subjectively certain that such is the
case. "Know" suggests a high degree of subjective confidence as
to a fact, according to the Government, but does not require that
the fact be objectively true.
This is an issue of first impression in any circuit,
inasmuch as the only decisions to have examined the 1990 version
of з 2S1.1(b)(1) involved the laundering of actual proceeds of
narcotics dealing. See United States v. Restrepo, 936 F.2d 661,
665 (2d Cir. 1991); United States v. Atterson, 926 F.2d 649 (7th
Cir.), cert. denied sub nom. Laurelez v. United States, 111 S.Ct.
2909 (1991). Fortunately, we need not now opine as to the
meaning of "knowledge," because we have adequate guidance for our
consideration of з 2S1.1(b)(1) from the amended section,
effective November 1, 1991, which was not applicable to Breque.
The new guideline reads:
If the defendant knew or believed that the funds were
proceeds of an unlawful activity involving the
manufacture, importation, or distribution of narcotics
or other controlled substances, increase by 3 levels.
U.S.S.G. з 2S1.1(b)(1) (Nov. 1991) (emphasis added). Appendix C
of the 1991 Amendments describes the purpose of the amendment to
з 2S1.1(b)(1):
Section 2S1.1(b)(1) is amended by inserting "or
believed" immediately following "knew" . . . .
element distinguishing these two sections is that the funds
laundered come from narcotics activity. Section 2S1.1(b)(1)
speaks directly to the laundering of narcotics proceeds.
18

This amendment revises this guideline to reflect the
enactment of subsection (a)(3) of 18 U.S.C. з 1956 that
authorizes undercover "sting" operations in money
laundering cases. Such cases differ from those
prosecuted under subsection (a)(1) in that the money
being laundered is not actually criminal proceeds, but
is government "sting" money that an undercover officer
represents to be criminal proceeds. In all other
respects, subsections (a)(1) and (a)(3) are the same.
The effective date of this amendment is November 1,
1991.
U.S.S.G. App. C, Amendment 378 (1991) (bold omitted).
While recognizing that the "believed" standard does not
apply here because it works a substantive change of the
guideline, see United States v. Miller, 903 F.2d 341, 347-49 (5th
Cir. 1990), the Government argues that the amended section
suggests the intention behind the earlier draft of з 2S1.1(b)(1).
We disagree. Section 2S1.1(b)(1) was amended expressly to
include defendants caught in Government sting operations. The
addition of the term "believe" to effect this purpose suggests
quite strongly that the word "know" in the version of з
2S1.1(b)(1) relevant here is insufficient, by itself, to
encompass the state of mind of defendants caught laundering money
that is not, in fact, the proceeds of drug activity. See United
States v. Payne, 1992 U.S. App. LEXIS 9577 (6th Cir. May 5, 1992)
(finding that amendment of з 2S1.1(b)(1) encompasses individuals
who "believe" that sting funds are proceeds of unlawful narcotics
activity). As the amendment to the guidelines shows, for the
specific purposes of з 2S1.1(b)(1), Breque only "believed" the
money to be proceeds of narcotics activity, but could not "know"
it to be so. Accordingly, the application of U.S.S.G.
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з 2S1.1(b)(1) to raise Breque's base offense level three levels
was error.
III. CONCLUSION
We AFFIRM Breque's conviction on all counts. As to his
sentence, we VACATE and REMAND to the district court for
resentencing consistent with this opinion.
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