MONEY LAUNDERING

The Federal statutes proscribing money laundering were enacted in 1986 with the passage of the Money Laundering Control Act, codified at 18 U.S.C. §§ 1956 and 1957.  The ordinary understanding of money laundering entails financial transactions to hide or invest criminal profits in order to evade detection or promote unlawful activity.  See United States v. Butler, 211 F.3d 826, 829 (4th Cir. 2000) (“Congress passed the money laundering statutes to criminalize the means criminals use to cleanse their ill-gotten gains.”).  Recently, in United States v. Santos, 2008 WL 2229212 (2008), the Government contended that “the purpose of the federal money-laundering statute…is…to penalize criminals who conceal or promote illegal activities.”  Id. at *5.

However, straightforward financial transactions without concealment or indicia of traditional money laundering can be prosecuted.  See 18 U.S.C. § 1953.  Such “Receipt and deposit” prosecutions are disfavored and have been criticized because the harm of the money laundering transaction (i.e., the withdrawal or deposit) is not significantly greater than that of the underlying offense. United States v. Brown, 186 F.3d 661, 669 n. 12 (5th Cir. 1999) (citing REPORT FOR THE SENATE AND HOUSE JUDICIARY COMMITTEE ON THE CHARGING AND PLEA PRACTICES OF FEDERAL PROSECUTORS WITH RESPECT TO THE OFFENSE OF MONEY LAUNDERING 8-9 (1996) (report issued by the Department of Justice pursuant to Pub.L. 104-38, 109 Stat. 334 (1995))).

Section 1957(a) was designed by Congress to make drug dealers’ money worthless by criminalizing transactions in which the participants knowingly give or accept money derived from unlawful activity.  United States v. Hatcher, 2005 WL 1253867, *6 (4th Cir. 2005) (citing H.R.Rep. No. 99-855, at 13 (1986)) (internal quotation marks omitted). Though similar to section 1956, section 1957 is broader because it criminalizes transactions without requiring proof of intent to conceal the underlying unlawful activity or to promote unlawful activity.  Id. (citing United States v. Allen, 129 F.3d 1159, 1164-65 (10th Cir.1997) (discussing the differences between § 1956 and § 1957)).

Although, the United States Attorney’s Manual provides that “only particularly complex and sensitive cases should be prosecuted” under the money-laundering statutes, United States v. Bart, 973 F.Supp. 691, 697 (W.D.Tex.1997) (citing U.S. Dept. of Justice, United States Attorney’s Manual, Section 9-3.400.),  prosecutors frequently bring these prosecutions to apply pressure to a defendant or increase the defendant’s sentencing exposure.  Section 1957 has been described as a draconian law, and its haphazard use should not go unscrutinized.   See United States v. Rutgard, 116 F.3d 1270, 1291 (9th Cir. 1997) (“This draconian law, so powerful by its elimination of criminal intent, freezes the proceeds of specific crimes out of the banking system.”).

Congress intended the money laundering statute to be a separate crime distinct from the underlying offense that generated the money to be laundered.  United States v. Heaps, 39 F.3d 479, 486 (4th Cir. 1994), recognized as abrogated on other grounds by United States v. Villarini, 238 F.3d 530, 534-35 (4th Cir.2001).  Congress aimed the crime of money laundering at conduct that follows in time the underlying crime rather than to afford an alternative means of punishing the prior “specified unlawful activity.”  Id.  This same reasoning applies to money laundering under Section 1956 or 1957.  See United States v. Butler, 211 F.3d 826, 829 (4th Cir. 2000).  Money laundering can be charged as a substantive offense or a conspiracy.

Money laundering typically accompanies a charge of the unlawful activity that produced the laundered money.  Therefore, nearly every federal law enforcement agency investigates money laundering including the Internal Revenue Service, United States Customs Service, United States Secret Service, Bureau of Alcohol, Tobacco and Firearms, Federal Bureau of Investigation, Drug Enforcement Administration, and United States Postal Service.

Trombley &Hanes has effectively represented many clients investigated or charged with money Laundering.  For example, we successfully represented the former COO of a publically traded company who was alleged to have committed money laundering through the sale of stock. 

Representative Case

United States of America v. Individual – United States District Court, Middle District of Florida – Trombley & Hanes, P.A. lawyers represented a Senior Vice President of Merrill Lynch of Central America.  The charges by indictment alleged various unlawful financial transactions conducted in Central America.  The defendants were lured into the United States under the guise of conducting further financial transactions when arrested for money laundering.  The trial lasted approximately six weeks before a jury in Tampa, Florida and all of the clients were acquitted of the charges filed.