Supreme Court Narrows "Money Laundering" Law
Washington, DC (June 2, 2008) -- In two opinions today, the Supreme Court significantly pared back the reach and scope of the money-laundering statute (18 U.S.C. §1956) and has in the process reinvigorated an old and glorious defense – the rule of lenity. The Court’s opinions vindicate the criminal defense bar’s long and loud criticisms that money-laundering charges were being “tacked-on” or threatened in order to induce pleas and rack up higher sentences, a lawyer with the National Association of Criminal Defense Lawyers (NACDL) said.
In a unanimous opinion, Cuellar v. United States, No. 06-1546, the Court held that while prosecutors do not have to prove that defendants intended to create an appearance of illegitimate wealth in their handling of funds derived from unlawful activities, they must nonetheless prove that the defendants’ handling of the funds “was designed to conceal or disguise the specified attributes [nature, location, source, ownership or control] of the illegally obtained funds” (slip op. at 10). A search of the car Humberto Regalado Cuellar was driving through Texas turned up $81,000 hidden under the rear floorboards, and he was convicted of transporting currency in order to conceal the source or ownership of the money. Justice Clarence Thomas, writing for the Court, clarified that merely hiding funds during transportation does not violate the money laundering statute.
Jeffrey T. Green, deputy chair of NACDL’s Amicus Curiae Committee observed that the decision could have other implications also. “While Cuellar was a drug-transportation case, the Court’s holding doubtless will apply to identical statutory language often charged in Foreign Corrupt Practices Act cases where funds allegedly used for foreign bribery are the object of various financial transactions,” Green said. “In effect, the Department of Justice’s Fraud Section and the Securities and Exchange Commission will now have a harder time ‘tacking on’ – or threatening to tack on – money-laundering charges in conjunction with FCPA violations.”
In the other case, United States v. Santos, No. 06-1005, Efrain Santos and Benedicto Diaz were charged with having run an illegal gambling operation, and money laundering charges were added-on on the basis of payments made to “runners” for their assistance. A divided Court held that the term “proceeds,” as used in the money-laundering statute, was too broadly read by prosecutors to include gross receipts – as opposed to only profits – from a criminal enterprise. “While the facts of the case would otherwise appear to limit the scope of the holding, Justice Antonin Scalia’s powerful resuscitation of the rule of lenity defense will apply across-the-board in all criminal cases where the underlying statutes are ambiguous and thus fail to put the public on notice of where the “do-not-cross” line actually is,” Green said.
Jeffrey Green and Kevin M. Henry, of Sidley Austin LLP in Washington, D.C., wrote NACDL’s amicus curiae brief in Santos.
Craig D. Singer, John E. Clabby, David A. Taylor and Christopher R. Hart, of Williams & Connolly LLP authored NACDL’s brief in Cuellar.
The briefs are available to the public on NACDL’s Amicus Curiae Web page at: