Willful-Blindness “Warning Signs” and No Separate Good-Faith Instruction in § 1956(h) Money-Laundering Conspiracies

Case: United States v. Quaye (Nos. 24-1650, 24-1821) (1st Cir. May 15, 2026)
Court: United States Court of Appeals for the First Circuit
Panel: Gelpí, Thompson, and Dunlap, Circuit Judges (Dunlap, J.)
Disposition: Convictions and Sepetu’s sentence affirmed

1. Introduction

This First Circuit opinion affirms the money-laundering conspiracy convictions of Nafis Quaye and Sunna Sepetu under 18 U.S.C. § 1956(h) (conspiracy) and 18 U.S.C. § 1956(a)(1)(B)(i) (concealment money laundering). The government’s proof centered on a years-long pattern in which Quaye used friends and family as nominal business “owners” to open bank accounts, including accounts controlled by Sepetu for a business called “Logitech.” Large wire transfers—predominantly from a U.S. victim, Maryann Schirmer— flowed into these accounts and were quickly wired out, withdrawn in cash, or spent on personal expenses.

The key appellate issues were: (i) whether the circumstantial evidence sufficed to prove that defendants knew (or were willfully blind to) the criminal source of the funds; (ii) whether the trial court properly gave a willful blindness instruction; (iii) whether the court erred by declining to give defendants’ preferred good faith instruction; (iv) whether the government’s collective references to “the defendants” invited guilt by association as to Sepetu; and (v) whether an alleged Guidelines fact-finding error at Sepetu’s sentencing required remand.

2. Summary of the Opinion

3. Analysis

3.1. Precedents Cited

A. Sufficiency of the evidence (Rule 29 framework and limits on inference)

• United States v. Pérez-Greaux and United States v. Bobadilla-Pagán anchor the standard of review: de novo review of Rule 29 denials, evidence viewed in the light most favorable to the government, with deference to jury credibility determinations and inferences supported by a “plausible rendition of the record.”
• United States v. Coleman (quoting United States v. Morillo) provides the “equal or nearly equal circumstantial support” principle—if guilt and innocence are equally supported, reversal is required.
• United States v. Burgos (with citations to Morgan v. Dickhaut and Leftwich v. Maloney) supplies the caution against unreasonable “illations” and “stack[ing] inference upon inference.”

B. Conspiracy elements and knowledge through actual knowledge or willful blindness

• United States v. Burgos (quoting United States v. Dellosantos) sets out the three conspiracy elements: existence of a conspiracy; knowledge; and knowing, voluntary participation.
• United States v. Burgos (quoting United States v. Lizardo) and United States v. Azubike confirm that “knowledge” can be proven by actual knowledge or willful blindness (awareness of a high probability plus deliberate avoidance).

C. Money laundering elements (concealment and knowledge of “some” unlawful activity)

• United States v. Frigerio-Migiano frames the concealment-laundering elements under § 1956(a)(1)(B)(i), including knowledge that the funds are proceeds of unlawful activity and that the transaction is designed to conceal attributes of those proceeds.
• United States v. Cedeno-Perez emphasizes that a defendant need not know the “precise origin” of the proceeds; it is enough to know they derive from “some form” of felony activity (referencing § 1956(c)(1)).

D. Red flags, “straw” structures, and circumstantial proof of laundering knowledge

• United States v. Adorno-Molina and United States v. Rivera-Rodriguez support the inference of laundering knowledge where there is repeated use of straw owners, concealment, frequent transfers, and large cash activity forming a pattern consistent with laundering.
• United States v. Flores (Third Circuit) is invoked for the proposition that the absence of invoices documenting source of funds is probative.
• United States v. Singh is used to explain “inquiry notice” and willful blindness: warning signs plus claimed lack of knowledge can support an inference of deliberate ignorance.
• United States v. Corchado-Peralta is cited for the inference of illicit source from a mismatch between massive expenditures and limited legitimate income.
• United States v. Abbas (quoting United States v. Rivera-Izquierdo) supports inferring knowledge of criminal nature where a bank investigator raises concerns yet the defendant continues to receive funds in similar suspicious circumstances.

E. The willful-blindness instruction standard and evidentiary overlap

• United States v. Evans notes inconsistency in the Circuit about the standard of review for preserved willful-blindness challenges, but the panel finds the instruction proper under either de novo or abuse-of-discretion review.
• United States v. Azubike supplies the three-part test for giving the instruction and the core idea that direct evidence is not required; “warning signs” that call for investigation suffice.
• The opinion relies on United States v. Azubike again to reject an argument that the government cannot rely on the same evidence to support both actual knowledge and willful blindness; the court states it has never required the two evidentiary sets to be distinct and allows complete overlap.
• United States v. Adorno-Molina is used to reinforce that uninvestigated “flags” can justify the instruction.

F. Good faith instructions (when required and when not)

• United States v. Figueroa-Lugo provides de novo review for refusal to give a requested instruction.
• United States v. Dockray states the central rule: even if good faith is an absolute defense, no separate instruction is required where the jury is properly instructed on the element of intent; the court need only convey the substance.
• United States v. Goodspeed is cited for declining to require a standalone good-faith instruction where specific intent is accurately charged.
• United States v. Arcadipane supports the sufficiency of instructions that explicitly mention good faith and clearly require proof beyond a reasonable doubt of specific intent.
• United States v. González-Pérez (quoting United States v. González-Soberal) provides the three-part reversible-error test for refusal of requested instructions, with United States v. De La Cruz on “substantial prejudice.”

G. Prosecutorial argument, guilt by association, and curative instructions

• United States v. Wilkerson supplies the plain-error standard for unpreserved prosecutorial misconduct claims.
• United States v. Dworken and United States v. Allen articulate the risk of guilt by association, particularly where a relatively less-involved defendant is tried with more culpable co-defendants.
• United States v. Lebron-Gonzalez and Opper v. United States are cited for the role of cautionary instructions in neutralizing association-based prejudice.
• United States v. Canty and United States v. Ayala-Garcia are distinguished as involving far more severe or pervasive improper remarks than the collective “defendants” phrasing used here.

H. Sentencing procedure, clearly erroneous facts, and harmless Guidelines error

• United States v. Delgado (quoting United States v. Contreras-Delgado) and Gall v. United States establish the procedural-reasonableness framework, including error for reliance on clearly erroneous facts.
• United States v. Romero-Carrion (quoting United States v. Noone) gives the harmless-error principle: no reversal if it is “highly probable” the error did not affect the judgment.
• United States v. Rivera (quoting United States v. Ouellette) anchors the key holding: when the district court makes clear it would impose the same sentence regardless of the Guidelines, a Guidelines calculation error is harmless.

3.2. Legal Reasoning

A. Why the evidence was sufficient despite no direct link to the romance scam

The defendants’ principal factual theme on appeal was absence of direct proof connecting them to the romance fraud’s operator (Ansah) or the victim (Schirmer). The court’s response is doctrinally important: for § 1956 laundering conspiracy, the government need not prove the defendant knew the “precise origin” of the proceeds (United States v. Cedeno-Perez), only that they came from some felony; and knowledge may be inferred from patterns and red flags, including concealment structures, absence of legitimate records, and continued transactions after warnings.

The court emphasizes a holistic inference from the pattern: multiple nominal business entities opened through friends/family; repeated large wires into accounts; rapid wiring out; substantial cash withdrawals and personal expenditures; lack of export-business documentation (titles, bills of lading, invoices); inconsistent accounts to bank compliance and law enforcement; and continuation even after Santander compliance and police inquiries. In this mix, the name “Maryann K Schirmer” on repeated U.S.-origin wires, often marked “investment,” becomes a concrete “red flag” inconsistent with the asserted Ghana export story.

B. Willful blindness: “warning signs” plus failure to investigate

Applying United States v. Azubike, the court holds the willful-blindness instruction proper because: (1) defendants claimed lack of knowledge; (2) the evidence suggested deliberate ignorance; and (3) the instruction did not mandate an inference and expressly excluded negligence. The opinion is especially explicit that the same evidentiary record may support both actual knowledge and willful blindness and that the government need not segregate the proof into two non-overlapping sets.

C. Good faith: the charge need not include defendants’ preferred formulation

Defendants sought an instruction stating “good faith is a complete defense.” The panel, invoking United States v. Dockray and United States v. Goodspeed, reiterates the First Circuit’s approach: a separate good-faith instruction is unnecessary if the jury is correctly instructed on the government’s burden to prove knowing, willful, intentional participation and if the charge otherwise conveys the substance of the defense. Here, the charge did so—by requiring proof beyond a reasonable doubt of knowledge and intent, contrasting criminal intent with good faith, and explaining that accidental/mistaken conduct is not “knowing.”

D. Collective “defendants” references: permissible argument plus strong limiting instructions

Under plain-error review (United States v. Wilkerson), the court finds no improper “guilt by association” argument. Even if Quaye’s conduct spanned more entities, Sepetu’s own acts—opening and operating the Logitech accounts, receiving $827,000 from Schirmer, wiring out funds at Quaye’s direction, and using funds for personal expenses—were central and independently sufficient for the government to discuss the scheme in joint terms. The court also relies on robust jury instructions requiring separate consideration of each defendant, consistent with United States v. Lebron-Gonzalez and Opper v. United States.

E. Sentencing: assumed Guidelines error rendered harmless by an explicit alternative sentence

Sepetu attacked a two-level enhancement under U.S.S.G. § 2B1.1(b)(2)(A) (substantial financial hardship) and the denial of a reduction under U.S.S.G. § 4C1.1(a), arguing the district court relied on unreliable information about Schirmer’s tax penalty. The panel sidesteps the merits because the district court repeatedly stated the Guidelines rulings would not affect the sentence and then imposed a dramatic downward variance (12 months and a day versus a 63–78 month range). Under United States v. Rivera, such an explicit “same sentence regardless” pronouncement makes any Guidelines error harmless.

3.3. Impact

• Willful blindness in financial crime cases: The decision strengthens prosecutorial reliance on “warning signs” evidence—particularly patterns of straw account ownership, rapid pass-through wires, lack of ordinary business records, and post-inquiry continuation—to justify willful-blindness instructions even where the same evidence also supports actual knowledge.
• Instructional litigation strategy: Defendants in the First Circuit face an uphill battle demanding bespoke “good faith is a complete defense” wording when the court gives a correct intent charge that substantially covers the defense.
• Joint trials and guilt-by-association claims: The opinion underscores that collective phrasing about “defendants” will generally be tolerated when each defendant’s conduct independently supports liability and when the jury is forcefully instructed to assess each defendant separately.
• Sentencing appeals: The case is a reminder that explicit alternative sentencing statements can significantly constrain appellate remedies for alleged Guidelines calculation errors—especially where the court announces the Guidelines will not drive the sentence and imposes a major variance.

4. Complex Concepts Simplified

• Money laundering (concealment) under § 1956(a)(1)(B)(i): It is not just “spending dirty money.” It is conducting a financial transaction with criminal proceeds in a way designed to hide where the money came from, who owns it, or where it is.
• Conspiracy under § 1956(h): The crime is the agreement and participation—joining a plan to launder money—plus intent to help achieve that plan’s unlawful objective.
• Willful blindness: A substitute for actual knowledge. The jury may treat a defendant as “knowing” when the defendant suspects a high probability of illegality but deliberately avoids confirming it. The instruction is improper if it would allow conviction for mere carelessness, but the instruction here expressly excluded negligence.
• Good faith defense: If a defendant honestly believed the conduct was legitimate, that negates the required intent. In the First Circuit, judges often do not need a standalone “good faith” instruction if the intent element is clearly and correctly explained.
• Harmless Guidelines error: Even if the judge made a mistake calculating the advisory Guidelines range, the sentence can stand if the appellate court is confident the mistake did not matter—particularly where the judge states they would impose the same sentence regardless.

5. Conclusion

United States v. Quaye is a significant First Circuit reaffirmation of three practical rules in money-laundering conspiracy prosecutions: (1) knowledge of the criminal source of funds may be proven through circumstantial “pattern and red flags” evidence, even absent direct proof tying defendants to the predicate fraud; (2) a willful-blindness instruction is appropriate when warning signs call for inquiry and the defendant claims ignorance, and the evidentiary basis may overlap entirely with proof of actual knowledge; and (3) a separate, defendant-drafted good-faith instruction is not required when the jury is correctly instructed on specific intent and the substance of good faith is conveyed. The opinion also illustrates the potency of an explicit alternative-sentence statement in insulating a sentence from Guidelines-calculation disputes on appeal.