In the Courts

International Money Laundering

In United States v. Cuellar, ___ F.3d ___, 2007 WL 293406 (5th Cir. Feb. 2, 2007), a Fifth Circuit en banc review of a panel decision, the Circuit Court held that merely concealing cash in order to sneak it out of the country was sufficient to satisfy the 'conceal' prong of the international money laundering statute, 18 U.S.C. ' 1956(a)(2). There is no need for the government to prove that the defendant's acts created the appearance of legitimate wealth, only that they were designed to conceal the identity of the funds.

The defendant was apprehended en route to Mexico with $53,000 in cash secreted in his car. The money was alleged to have been proceeds from drug distribution. The evidence presented at trial indicated that the money smelled strongly of marijuana, and that steps had been taken to hide the money from both sight and smell. The defendant argued that merely hiding cash in order to take it out of the country is not 'laundering' without some evidence that the defendant planned to conceal the funds once they reached their destination. The Fifth Circuit agreed that the statute requires sufficient evidence to find that the defendant transported the money 'to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds,' but held that a jury could find that hiding the cash en route was concealment within the meaning of the statute, and that no showing that the defendant intended to take further actions to create the appearance of legitimacy was required.

Acquitted Conduct May Serve As Sentence Enhancement

The Ninth Circuit recently held that a sentencing court may consider acquitted conduct in sentencing. United States v. Mercado, 474 F. 3d 654 (9th Cir. 2007).

The defendants were convicted at trial of RICO conspiracy and of conspiracy to distribute narcotics, but acquitted of other charges, including conspiracy to commit murder. At sentencing, the trial court considered the criminal activity charged in the acquitted counts to enhance the defendants' sentences. The resulting sentences did not exceed the statutory maximum for the convicted counts. The defendants appealed, arguing that considering acquitted conduct violated their constitutional right to a jury trial, particularly in light of the Supreme Court's ruling in United States v. Booker, 543 U.S. 220 (2005). The Ninth Circuit disagreed, pointing out that the jury found that those counts were not proven beyond a reasonable doubt, but that the sentencing court was free to find that the conduct was proven by a preponderance of the evidence. Therefore it was not error for the court to consider the acquitted conduct in sentencing, even in light of Booker.

No Presumption of Vindictiveness

In United States v. Medley, ___ F.3d ___, 2007 WL 431494 (10th Cir. Feb. 9, 2006), the Tenth Circuit held that there is no presumption of vindictiveness when a remand for resentencing following a defendant's appeal results in a harsher sentence.

The defendant was convicted on charges of mail and wire fraud, making a fraudulent federal claim, money laundering, impersonating a federal employee, and false statements. She appealed her 78-month sentence on several theories, but the case was ultimately remanded for re-sentencing under United States v. Booker, 543 U.S. 220 (2005). On remand the government submitted additional objections to the guidelines calculations made in the original Pre-Sentence Report. As a result, the sentencing court recalculated the guidelines sentence and imposed a within-guidelines sentence of 97-months. The defendant appealed again, arguing that the new sentence was presumptively vindictive. The Tenth Circuit disagreed, holding that there is no presumption of vindictiveness when a remand results in a harsher sentence and that the defendant has the burden of proving actual vindictiveness, a burden not met here.

In the Courts and Business Crimes Hotline were written by Associate Editor Thomas M. Craig, of Williams & Connolly LLP, Washington, DC.

Intention to Repay Is Not a Defense to Mail and Wire Fraud

In United States v. Radziszewski , 474 F.3d 480 (7th Cir 2007), the Seventh Circuit held that an intention to repay fraudulently obtained funds does not support a 'good-faith' defense to mail and wire fraud.

The defendant was charged with paying individuals with good credit to serve as straw buyers in real estate transactions. The scheme involved using a straw buyer to fraudulently obtain mortgage financing from a financial institution to make a real estate purchase. The property was then resold at a higher price to a second straw buyer, who had in turn obtained financing from a second institution. On appeal, the defendant argued that he should have been allowed to present a 'good faith' defense to the charge that he defrauded the first financial institution, because he intended to repay that lender with the funds obtained from the second institution. The Seventh Circuit rejected that argument, holding that whether the defendant intended to repay the fraudulently obtained funds is irrelevant. The crime of fraud, the court explained, was complete when the money was obtained under false pretenses.

International Money Laundering

In United States v. Cuellar , ___ F.3d ___, 2007 WL 293406 (5th Cir. Feb. 2, 2007), a Fifth Circuit en banc review of a panel decision, the Circuit Court held that merely concealing cash in order to sneak it out of the country was sufficient to satisfy the 'conceal' prong of the international money laundering statute, 18 U.S.C. ' 1956(a)(2). There is no need for the government to prove that the defendant's acts created the appearance of legitimate wealth, only that they were designed to conceal the identity of the funds.

The defendant was apprehended en route to Mexico with $53,000 in cash secreted in his car. The money was alleged to have been proceeds from drug distribution. The evidence presented at trial indicated that the money smelled strongly of marijuana, and that steps had been taken to hide the money from both sight and smell. The defendant argued that merely hiding cash in order to take it out of the country is not 'laundering' without some evidence that the defendant planned to conceal the funds once they reached their destination. The Fifth Circuit agreed that the statute requires sufficient evidence to find that the defendant transported the money 'to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds,' but held that a jury could find that hiding the cash en route was concealment within the meaning of the statute, and that no showing that the defendant intended to take further actions to create the appearance of legitimacy was required.

Acquitted Conduct May Serve As Sentence Enhancement

The Ninth Circuit recently held that a sentencing court may consider acquitted conduct in sentencing. United States v. Mercado , 474 F. 3d 654 (9th Cir. 2007).

The defendants were convicted at trial of RICO conspiracy and of conspiracy to distribute narcotics, but acquitted of other charges, including conspiracy to commit murder. At sentencing, the trial court considered the criminal activity charged in the acquitted counts to enhance the defendants' sentences. The resulting sentences did not exceed the statutory maximum for the convicted counts. The defendants appealed, arguing that considering acquitted conduct violated their constitutional right to a jury trial, particularly in light of the Supreme Court's ruling in United States v. Booker , 543 U.S. 220 (2005). The Ninth Circuit disagreed, pointing out that the jury found that those counts were not proven beyond a reasonable doubt, but that the sentencing court was free to find that the conduct was proven by a preponderance of the evidence. Therefore it was not error for the court to consider the acquitted conduct in sentencing, even in light of Booker.

No Presumption of Vindictiveness

In United States v. Medley , ___ F.3d ___, 2007 WL 431494 (10th Cir. Feb. 9, 2006), the Tenth Circuit held that there is no presumption of vindictiveness when a remand for resentencing following a defendant's appeal results in a harsher sentence.

The defendant was convicted on charges of mail and wire fraud, making a fraudulent federal claim, money laundering, impersonating a federal employee, and false statements. She appealed her 78-month sentence on several theories, but the case was ultimately remanded for re-sentencing under United States v. Booker , 543 U.S. 220 (2005). On remand the government submitted additional objections to the guidelines calculations made in the original Pre-Sentence Report. As a result, the sentencing court recalculated the guidelines sentence and imposed a within-guidelines sentence of 97-months. The defendant appealed again, arguing that the new sentence was presumptively vindictive. The Tenth Circuit disagreed, holding that there is no presumption of vindictiveness when a remand results in a harsher sentence and that the defendant has the burden of proving actual vindictiveness, a burden not met here.

In the Courts and Business Crimes Hotline were written by Associate Editor Thomas M. Craig, of Williams & Connolly LLP, Washington, DC.