SUPREME COURT REINS IN MONEY LAUNDERING TRANSPORTATION PROSECUTIONS
The government has expanded money laundering prosecutions from the purpose originally anticipated by Congress which was aimed to stop organized crime and drug dealers from legitimizing or cleaning illegal proceeds. The Supreme Court case ofCuellar v. U.S., 128 S. Ct. 1994 (2008), significantly impacted prosecutions under the money laundering transportation statute and is a long overdue step toward bringing money laundering prosecutions back to something approaching the laws original purpose.
The charge in Cuellar involved a violation of 18 U.S.C. $ 1956(a)(2)(B)(i). This statute makes it a crime to attempt to transport the proceeds of unlawful activity across the border, knowing the transportation was designed to conceal or disguise the nature, location, source, ownership, or control of the money. The defendant was stopped approximately 100 miles north of the Mexican border in Texas driving a van in which was hidden $81,000.00 in cash.
Following a two-day jury trial, the defendant was convicted. The government's theory was that the conduct of the defendant, in driving the car with the cash hidden in an effort to prevent its detection, was proof of a violation of the transportation money laundering statute. The court pointed out that the defendant had to know that the effect of his transporting the money, if it made it into Mexico, effectively accomplished one of the purposes prohibited by the statute. Justice Alito, in his concurring opinion, gave the succinct description of the various purposes with the following language:
Transporting the funds across the border would have had the effect of achieving this objective if, once the funds made it into Mexico, it would have been harder for law enforcement authorities in this country (1) to ascertain that the funds were drug proceeds ("nature"), (2) to find the funds ("location"), (3) to determine where they came from ("source"), (4) to ascertain who owned them ("ownership"), or (5) to find out who controlled them ("control").
Cuellar at 2006.
The government argued to the Supreme Court that proof of concealing the money during transportation was sufficient to satisfy the element of the statute which requires that the money was taken into Mexico with a design to conceal the nature, location, source, ownership or control of the money. The government argued that circumstantial evidence established the ultimate
purpose of the transportation, that is, its design to accomplish the unlawful concealment or disguising of the funds. The Supreme Court rejected this argument and stated "we agree with petitioner that merely hiding funds during transportation is not sufficient to violate the statute, even if substantial efforts had been expended to conceal the money." Cuellar at 2003.
Concealing money for the purpose of facilitating the transportation was not sufficient to show the defendant knew that when the money reached Mexico it would be for the purpose of concealing or disguising the nature, location, source, ownership or control of the funds. The court held that the statute makes it clear that a conviction under 18 U.S.C. $ 1956(a)(2)(B)(i) requires proof that the purpose, not merely the effect of the transportation, was to conceal or disguise the funds as prohibited under law.
This case is significant not only for its limitation of the purpose of the money laundering statute, but also in the Supreme Court's rejection of the government's ever-expanding utilization of what it calls circumstantial evidence.
On a practical note, hiding money while traveling may be indicative of many purposes including preventing theft. Even if the money is from illegal activity, the purpose of the transportation out of the country could be for spending rather than the purposes proscribed by this money laundering statute. The government may still prosecute the underlying criminal conduct without piling on an additional charge of money laundering which improperly expands the money laundering statute.