The rulings of the Supreme Court last week on two money laundering cases will directly impact the federal government’s ability to utilize a very powerful prosecutorial tool, with conviction carrying a prison sentence of up to 20 years.
The first case, Cuellar v. United States, seemed like a “no-brainer” as the Court ruled 9-0 that simple concealment of cash is not money laundering.
In this case, Humberto Cuellar was convicted in October 2004 and sentenced to 6 1/2 years in federal prison for money laundering. Cuellar was intercepted while traveling in southern Texas toward the Mexican border.
Officers found $81,000. in cash in a secret compartment under the floorboard of his vehicle. The currency was bundled in plastic bags and duct tape, and animal hair was spread in the hidden compartment to hamper
K-9 detection. Cuellar could not explain where he was going or from where he got the money.
The Court ruled that simple concealment was not enough to convict someone for money laundering. Writing for the Court, Justice Clarence Thomas stated that Cuellar’s conviction required that he knew that the purpose, not merely the effect, of his transporting money was to conceal or disguise its illicit nature. Although the evidence did show the intent to avoid detection while driving the funds to Mexico, it did not show that the defendant intended to create the appearance of “legitimate wealth”.
The Court ruled that prosecutors must demonstrate that the purpose of “transporting” in a money laundering case is to conceal ownership, sources and control. Justice Thomas wrote in his opinion, “How one moves the money is distinct from why one moves the money”.
Chief Justice John Roberts added, “When I use a suitcase I’m using it to carry my clothes, not conceal them”. Judge Thomas indicated that the literal interpretation of the law would apply to someone who “hid illicit funds enroute to turn them over to law enforcement”. If merely hiding money while taking it out of the U.S. violated federal money laundering laws, then even the simple act of hiding money on one’s person before heading to Mexico “for a night on the town” would be money laundering.
The 1986 Money Laundering Control Act has been interpreted broadly and used to gain nearly 1000 convictions in 2006. It is conservatively estimated that over $8 billion a year from Mexican and Colombian drugs is transported across the border and laundered according to the Justice Department’s National Drug Intelligence Center.
It is anticipated that Congress will rewrite the law to address the type of conduct Cuellar was arrested for because transporting drug money from the U.S. to Mexico is an every day occurence.
My next blog will address the Santos v. United States case, a 5-4 Supreme Court decision addressing “proceeds”, which will be a more complicated issue to address for federal agents and prosecutors.