Shawn Rice, a leader in the anti-government “sovereign citizens” movement, was convicted in federal court Tuesday in a $1.3 million money laundering scheme.
After a 1½-day bench trial, U.S. District Judge James Mahan found Rice guilty of one count of conspiracy to commit money laundering and 13 counts of money laundering, all felonies.
Mahan also found Rice guilty of four separate failure to appear counts stemming from the 654 days Rice spent as a fugitive in the criminal case. The judge set an Oct. 24 sentencing date.
Rice, 49, who is in federal custody, and co-defendant Samuel Davis were charged in March 2009 with laundering the $1.3 million for undercover FBI agents posing as shady businessmen.
With his wife and followers watching in the courtroom, Rice showed no emotion at the defense table, as Mahan said from the bench that the government had proved Rice participated in the scheme.
Rice, a self-proclaimed rabbi and lawyer who represented himself during the trial, had argued that he was entrapped and had no predisposition to become involved in the conspiracy.
“I have no history of doing anything like this with cash,” he told Mahan.
But the judge said it was clear that Rice had displayed criminal intent in his dealings with the agents.
“He came in with a state of mind,” Mahan said. “He was ready to do this.”
Rice’s only witness, Thomas B. Schaults, was handcuffed and arrested in court Tuesday on outstanding traffic tickets after he left the witness stand in a failed bid to testify.
Mahan told Schaults, who authorities later said was a player in the sovereign citizens movement, that he had no relevant information to provide the judge. Schaults, 58, had a Pennsylvania driver’s license on him when he was taken into custody and later booked into the Clark County Detention Center.
Rice’s days as a fugitive ended on Dec. 22, when he was arrested at his home in Seligman, Ariz., after a 10-hour armed standoff with FBI agents.
Mahan previously sentenced Davis, who is regarded as a national sovereign citizens leader, to 57 months in prison. Davis, a 57-year-old Idaho man, did not surrender to federal authorities at the end of June to start his prison term and is considered a fugitive.
Both defendants were indicted after a three-year undercover investigation led by the FBI into the local activities of the sovereign citizens. Other targets of the investigation previously have pleaded guilty to charges unrelated to the money laundering.
Undercover FBI agent Mark Aysta, who infiltrated the group in 2006, laid out the money-laundering conspiracy for prosecutors in testimony on Monday. Aysta was assigned at the time of the investigation to the Southern Nevada Joint Terrorism Task Force.
According to his testimony, Davis and Rice accepted fees to help the undercover agents launder money the agents claimed had come from the theft and forgery of official bank checks. Davis received roughly $74,000 in fees and Rice $22,000.
The defendants funneled the money they received from the FBI agents into bank accounts they controlled outside Nevada and then returned the money to undercover accounts set up by the agents after deducting their fees, testimony showed.
Several law enforcement agencies, including the Henderson Police Department and IRS-Criminal Investigation in Las Vegas, participated in the undercover investigation, which made use of court-approved electronic surveillance.
Paul Camacho, special agent in charge of IRS-Criminal Investigation, hailed Mahan’s bench verdict.
“The primary motivating factor in all our cases has been greed,” Camacho said.” I see no reason to think it was anything different here.
“For financial convenience, Mr. Rice engaged in egregious funny business to hide the fact that he did not want to follow the laws of this country.”
The sovereign citizens taught their anti-government leanings in Las Vegas to a nationwide following out of a local print shop. Tens of thousands of members of the movement have declared themselves outside the government’s jurisdiction and not obligated to pay taxes.
“The sovereign movement has an extreme anti-government ideology, embedded in conspiracy theories, inaccurate history and irrational interpretations of the law,” Assistant U.S. Attorney Gregory Damm wrote in a trial memorandum last week. “Sovereign citizens widely use fictitious financial instruments such as fraudulent money orders, personal checks, sight drafts and comptroller warrants.”
On Tuesday, Schaults tried to present Mahan with sovereign citizen rhetoric on the witness stand, but Mahan wouldn’t allow it.
“Whatever you have to present is going to be relevant,” Mahan told him. “We’re not going to sit here and listen to somebody’s opinion.”
At one point, Rice tried to argue in favor of letting Schaults testify, but Mahan cut him off, accusing Rice of speaking “gobbledygook” and “gibberish.”
After Schaults stepped down from the witness stand and walked to the courtroom doors, a Henderson police detective involved in the money laundering investigation handcuffed him and took him into custody.
Rice then rested his case, and Mahan heard closing arguments.
Damm told the judge that it looked like Rice had not “selected the best individuals to represent his interests” in court.
Rice throughout the proceedings appeared to show a “disrespect, a disdain for the federal judiciary,” the prosecutor said.
The evidence presented during the trial showed that Rice had laundered more than $705,000 of the $1.3 million for the undercover FBI agents, Damm said.
Rice contended that he was the victim of “unscrupulous” federal agents.
He insisted, though he said he couldn’t prove it, that Davis was an informant for the FBI at the time Rice became embroiled in the scheme in September 2008. That would mean there was no conspiracy, he argued.
But Mahan didn’t buy that argument, asking Rice, “What if he is not a confidential informant?”
“Then from September on, I have a problem,” Rice acknowledged.
From there, Rice spent the rest of his argument quoting from previously written sovereign citizen ideology trying to explain that the judge had no jurisdiction in the case.
In the end, Mahan convicted Rice, saying the government had provided convincing evidence of his guilt on all of the charges against him.
Contact Jeff German at firstname.lastname@example.org or 702-380-8135.