Friday, February 29, 2008

What is money laundering? SCOTUS to rule whether merely concealing cash is the same as laundering it

A Texas case before the US Supreme Court last week, Cuellar v. US, in which SCOTUS will determine what activities the government must prove to charge someone with "money laundering," had its oral arguments this week before the Wise 9. The feds would like the term to be broadly interpreted to include merely concealing money, but some of the Justices weren't so sure. Reported DRCNet:
Cuellar was ... convicted of money laundering, but appealed, arguing that the simple act of concealing money did not constitute money laundering under the 1986 federal money laundering law. Under that law, it is a crime to take the profits from "some form of unlawful activity" out of the country while hiding or disguising its nature, location, source, ownership, or control. The question the court must decide is whether merely hiding the money is sufficient to support a money laundering conviction.

While the Justice Department argued that concealing money as part of a plan to illegally take it out of the country indeed constitutes money laundering under the 1986 law, several justices suggested that it was simply going too far.

"I don't know why they call this statute 'Laundering of Monetary Instruments,'" Justice Stephen Breyer commented, wondering aloud if it would make it a crime to walk across the border with a few dollars hidden in a shoe. "Why didn't they call it 'shoe hiding'?"

"On the government's theory, anyone who transports hidden money to get it out of the country, who drives the car, just the driver, is a money launderer," noted Justice Ruth Bader Ginsberg.

"No matter how you see it, this was precisely the conduct that Congress was getting at," assistant solicitor general Lisha Schertler told the court.

But Cuellar's attorney, Jerry Beard, told the court it should interpret the law to mean something more than merely hiding cash. "The statute does not criminalize concealing money's existence," Beard said. Instead, he argued, it requires that someone must seek to minimize the criminal nature of the funds. While Cuellar "may have in fact concealed money itself, he did not conceal the 'nature, source, location, ownership or control' of the unlawful proceeds," Beard argued.

Chief Justice John Roberts Jr. challenged Beard on whether Cuellar was attempting to conceal the money, but later seemed to be equally skeptical of the government's position. When Schertler suggested that putting money in a suitcase in the trunk of car could be evidence of a "design to conceal," Roberts retorted: "When I use a suitcase, I'm using it to carry my clothes, not to conceal them."

Justice John Paul Stevens added that the government's broad position seemed to make the whole concept of money laundering irrelevant. "Is this just a total wild goose chase?" he asked.

The federal money laundering statute, most often used against presumed drug traffickers, carries a maximum 20 year sentence and fines of up to $500,000. Nearly a thousand people were convicted under the statute in 2006. But if Monday's oral arguments are any guide, the Justice Department may soon have to actually prove money laundering to gain a money laundering conviction, not just that someone was hiding cash.
Chief Justice Roberts' retort to the state that his suitcase is for carrying his clothes, not concealing them, calls into question the whole tactic of trolling the highways looking for drug money couriers. If the driver exercises their right to remain silent, what evidence do you really have that hidden cash came from drugs?

Before Texas' Byrne-grant funded drug task forces were shut down, one of the bones of contention between the task forces and the Department of Public Safety was that DPS wanted officers to work roughly 50% of their time on either side of the road. You see, drugs run north, while money and guns run south, so the task forces preferred to only work the southbound lanes of the highway, hoping to maximize the benefit from any forfeiture of money they found, like in Mr. Cuellar's case.

The case before SCOTUS shows some police and prosecutors may be pushing the bounds of propriety, pursuing forfeiture cases when there's no discernible evidence the money is related to drug trafficking. Whatever SCOTUS does won't finally solve this complex problem, which in my opinion could be ripe for a legislative fix after SCOTUS rules on Cuellar.

The easiest solution could be only allowing asset forfeiture in cases where the defendant is finally convicted of a related crime. Until then, they would remain shielded by the presumption of innocence that protects us all. Asset forfeiture cases are civil proceedings, and not infrequently funds are seized even when prosecutors don't have enough evidence to convict the driver. Why not link the proceedings?

It doesn't seem unreasonable to require prosecutors to prove someone committed a crime before allowing the state to seize their money, does it?


Ed Veronda said...

Texas seems to certainly be a favorite state of SCOTUS, doesn't it?
Western Justice

Anonymous said...

This is why they call Texas the Wild West. Texas has gone wild in ignoring the Constitution and individual rights to get a conviction.

SCOTUS is "sending a message". The Texas courts need to read and hear this message. The citizens of Texas deserve better protection of their rights from the courts. If Texas won't step up and do a better job, SCOTUS will.

Brave Sir Robin said...

Carrying large amounts of cash should not be a crime.


It's all about the forfeiture. Our local Sheriff's department has a whole fleet of new trucks all proudly sporting a "Paid For With Confiscated Drug Money" sticker..

Yes, I live in Texas.

Anonymous said...

Don't be idiots.

This is a Federal case based on federal law.

The Texas seizure statutes require proof and a link between the money and illicit conduct. A primary reason the money, though seized by a deputy sheriff, became a federal case. The local DA couldn't do anything with it.

This is a Federal seizure case under Federal Law, not a Texas seizure case.

Federal seizure laws are wildly open and need restriction.

Anonymous said...

Yes, but wealthy people don't carry large amounts of cash: that's the province of poor people [who shouldn't have lots of cash anyway]. Wealthy people invest their cash and earn high interest. That's how they become wealthy. Poor people can't afford banks and all their nickel-dime charges [poor penalties]. The idea of a cash less society comes from above. Of course, using cash preserves privacy - so rich folks going on "dates" with escorts often carry a wad.

Anonymous said...

Grits, can you give us non-lawyers a asimle clarification of the isues in the post at 11:54?

Anonymous said...

And forgive my spelling-should have gotten my reading glasses on before I started typing.