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Criminal Resource Manual

1320. National Stolen Property Act -- Tracing Doctrine

To effectuate the legislative purposes of the National Stolen Property Act, the courts, utilizing the principles of equity, have created a tracing doctrine for the proceeds of such thefts or frauds. The seminal case is United States v. Walker, 176 F.2d 504 (2d Cir. 1949). Walker involved the fraudulent acquisition by the perpetrator of checks sent by a mortgagee to the victim. The perpetrator exchanged the mortgagee's checks for two blank checks of $10,000 and $7,000, respectively, $3,000 in traveler's checks, and $6,000 in cash. The defendant then exchanged the $10,000 bank check for 100 additional traveler's checks. The defendant was prosecuted for transporting more than $5,000 of the traveler's checks taken feloniously by fraud in interstate commerce. The indictment was upheld. Walker, supra, at 566. The change in form doctrine has been recognized and followed in other cases. See United States v. Davis, 608 F.2d 555 (5th Cir. 1979); United States v. Levy, 579 F.2d 1332 (5th Cir. 1978); United States v. Pomponio, 558 F.2d 1172 (4th Cir. 1977); United States v. Poole, 557 F.2d 531 (5th Cir. 1977); United States v. Wright, 791 F.2d 133 (10th Cir. 1986). The Poole decision shows the need to specifically trace and identify the proceeds of the theft or fraud. If commingling of "good" funds with "stolen" funds occurs, such tracing can be difficult. In United States v. Lennon, 814 F.2d 185 (5th Cir. 1987) $5,000 or more of fraudulent kickback proceeds were commingled in interstate checks with legitimate funds. Because the government could prove that each check contained at least $5,000 of fraudulently obtained funds, the conviction was affirmed.

[cited in USAM 9-61.200]