MONEY LAUNDERING CHARGES
What is money laundering? Money laundering refers to financial transactions that involve money obtained through criminal activity. Usually, the purpose of a money laundering transaction is to take money earned through illegal activity and make it appear legitimate. It is called “laundering” because it is a process where someone is attempting to take “dirty” money and make it “clean.”
Money laundering occurs whenever money earned through illegal activity is deposited in a bank or other financial institution. Money laundering also occurs wherever illegally obtained money is spent in a way that helps promote or conceal the illegal activity.
In this video, Page Pate explains the different types of money laundering charges under federal law. Page also shows how our firm uses creative legal defenses to effectively respond to money laundering charges in court.
I’ve represented well over 100 people who were facing money laundering charges in federal court. Now, money laundering can be a complicated type of an offense, so I thought it might be helpful to walk through the basics, “What is money laundering, and what type of defenses have we used in the past to win these cases?” Well, to begin with, what is money laundering? Well, to put it simply, it’s taking dirty money, money from criminal activity, and making it clean, making it appear to be legitimate. And so it can be something as simple as taking money that was made from a drug transaction and depositing it into a checking account. That is technically money laundering.
Now, in federal court, we see money laundering charges usually in cases involving some type of underlying financial crime. It can be a drug crime. It can also be a fraud or embezzlement crime. It can be a racketeering/RICO Act-type of crime. Basically, any crime where the person is alleged to have made money, you’re going to see the federal government add money laundering charges to that case, and there’s a good reason for that. In addition to trying to make the person face additional criminal penalties, the government wants to get that money. So they use the money laundering charges as a way to convince a judge, even before the case goes to trial, to let the government seize the money and eventually try to keep it.
Now, there are various types of money laundering charges under federal law. The most common falls under 18 U.S.C. Section 1956. That’s the one that we see most of the time. Now, this is a serious crime. It carries up to 20 years in prison for someone who is convicted. Let’s go through the elements. The first element is that this must involve a financial transaction. And that means you take the money and you go to a bank, or you take the money and you go buy a car, go buy some jewelry. Anything that you do with that money where you’re exchanging it for goods, services, or trying to put it in a bank account is a financial transaction. What is not a financial transaction is if you take that money, give it to someone to hold for you, and all they do is put it in their bedroom or under the mattress. Even though that may be dirty money, it’s not money laundering because there’s no financial transaction.
The second element is that the money must be from a particular crime. It has to be dirty money. Now, the money laundering statute gives a list of different types of crimes that must be involved for the money to be money subject to a money laundering charge, but it’s a long list. So almost any type of federal crime where the person is alleged to have made some money can be the basis for a money laundering charge, as long as the money actually comes from the crime. And of course, the person who’s being charged with money laundering has to know that. They have to know that the money that they’re taking, receiving, or using in some way comes from some type of criminal activity.
And finally, for this type of money laundering offense, the money has to be used or a particular purpose. In other words, you’re taking the money, putting it into a bank account or buying something with it for the purpose of promoting the underlying crime, trying to conceal it, or trying to avoid a reporting requirement, taking the money and dividing it up into less than $10,000, which is a structuring crime and certainly can also be money laundering. But there’s another type of money laundering offense, and that’s found in 18 U.S.C. Section 1957. Also, a very serious crime, but the maximum is 10 years instead of 20 years and the elements are a little different.
First of all, it has to involve a monetary transaction. That’s a little bit different from the other money laundering crime. For this particular crime, the money has to involve a financial institution, a bank, an investment company, securities. You have to actually take the money and give it to some type of financial institution to be guilty of this type of money laundering offense. And there’s a threshold amount. The amount of the transaction has to be more than $10,000. But like the other money laundering charge, the money, of course, has to come from criminal activity and the person has to know that the money is dirty.
Now, there are other types of money laundering charges that kind of fall under these two laws. The first is international money laundering, and that’s basically money laundering that involves the movement of the money from one country to another, some type of international transaction. It can be from the United States to, say, Europe or Asia. Or it can simply involve the United States. Even if the money is moving between two foreign countries, if the United States is somehow involved in that transaction or someone in the United States is involved, then it can qualify for this type of money laundering. What’s interesting about international money laundering is that the money doesn’t actually have to come from a crime. As long as the person is trying to further the criminal activity that they may be involved with, even if the money is otherwise clean, they can be charged and convicted of international money laundering.
Now, we also see a lot of money laundering sting operations. Especially now, I’m seeing more and more of these cases being charged in federal court. Now, obviously, this involves an undercover operation by government agents and we see it two different ways. Either the government will set up some type of business, where they try to convince people to give them dirty money and then charge them with money laundering. Or they will act like they’re criminals, like they’re drug dealers or they’ve committed fraud, and they’ll go out to professionals, people in the community, accountants, merchants, financial advisors, even lawyers, and try to convince them to take money that is dirty.
Now, of course, in a sting operation, the money is not really dirty at all. It’s usually money that’s coming from the government. They’re just pretending that it’s dirty. The key thing, though, is that the person who’s being charged has to think that this money is from a crime, has to think that the money is actually dirty. And the government has a variety of different ways to try to make those suggestions without actually saying the money comes from a crime.
Now, you can also have money laundering conspiracy charges, and that’s basically money laundering, but it involves an agreement between two or more people. What’s interesting about a conspiracy, though, is you never have to take the money to a bank or you never have to actually engage in a transaction. What’s being punished here is the agreement to commit this unlawful act. So even if someone never sees dirty money but they know that there’s an attempt to do something with that dirty money, even if they played a very small role, they can be charged in a money laundering conspiracy.
Now, of course, like any federal case, there are defenses to this type of charge and we’ve used several of these successfully in other cases. The first offense is that the case doesn’t involve a monetary or financial transaction. A great example of this is, say, someone goes to a bank, robs the bank, ends up with a sackful of cash. They take the cash to a friend and say, “Hey, I need you to hide this for me. Go put it out back somewhere.” The other person takes the money, ti’s dirty money clearly, and then they go do something with it, they hide it, they conceal it, but they don’t take it to a bank, they don’t spend it. There’s been no monetary or financial transaction, so that’s not a money laundering case.
An obvious defense is that the money isn’t dirty. You see that in two ways. Either someone’s been involved or charged with being involved in a criminal activity and they’re using money in connection with that case, but the money came from some other source. It wasn’t directly from the criminal activity that was the basis of the case. We mostly see, though, this type of defense, and we used it successfully last month in fraud cases. The government says, “Okay, this person’s engaging in an illegal, fraudulent activity. So any money that they make and spend or use, deposit, has to be money laundering. Well, if you can show that the underlying activity wasn’t fraud to begin with, then the money is not dirty and there’s no money laundering.
You can also defend these charges even when you have dirty money. The money is clearly from a criminal activity, but the person being charged doesn’t know that. A good example of that is a merchant, say, a jeweler or someone who sells cars. And somebody’s got some dirty money, they go to these folks, they buy stuff from them, but the people selling the merchandise, the jewelry, the cars, they don’t know that the money is from an unlawful source. They may have some suggestions, they may have some suspicions, but the government has to show that they knew the money came from criminal activity.
Now, in 1956, that first money laundering charge we talked about, there’s this additional element that the government has to show that not just is the money from a crime, but that the transaction that’s taking place is for a particular purpose. You’re either trying to promote the unlawful activity, conceal it, or to avoid reporting requirements. If the government can’t show that, then that’s a good defense to a 1956 money laundering charge. And finally, if there is an undercover sting operation, you always want to consider an entrapment defense. Did the government go too far? Did they try to push this person to take money that the person really wasn’t interested in taking? Or were they so unclear about the source of the money that the person has a legitimate defense that they had no idea that the money was from any type of crime?
So there are a lot of defenses to money laundering charges. These are very serious charges, very complicated charges. If you’re going through it or know someone who is, you probably have questions. If you have questions, hopefully, we can have some answers. So give us a call and we will do our best to help
Money laundering laws cover both domestic and international financial transactions. International money laundering cases are usually focused on the purpose of the financial transaction. Even a transaction with “clean” money can be the basis of an international money laundering charge if the money is being used to promote a particular crime.
There are two federal criminal laws that specifically address money laundering. The first law (18 U.S.C. §1956) makes it a crime for any person to engage in a financial transaction with money that was obtained from criminal activity with the intent to try and promote the criminal activity or conceal it. The second law (18 U.S.C. §1957) makes it a crime for a person to engage in a monetary transaction in an amount greater than $10,000, knowing that the money was obtained through criminal activity.
What is money laundering? Money laundering refers to financial transactions that involve money obtained through criminal activity. Usually, the purpose of a money laundering transaction is to take money earned through illegal activity and make it appear legitimate. It is called “laundering” because it is a process where someone is attempting to take “dirty” money and make it “clean.”
Money laundering occurs whenever money earned through illegal activity is deposited in a bank or other financial institution. Money laundering also occurs wherever illegally obtained money is spent in a way that helps promote or conceal the illegal activity.
In this video, Page Pate explains the different types of money laundering charges under federal law. Page also shows how our firm uses creative legal defenses to effectively respond to money laundering charges in court.
Types of Drug Conspiracy Charges
There are four types of drug crimes under 21 U.S.C. § 841 and 21 U.S.C. § 952:
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Manufacturing a controlled substance – “Manufacturing” can include any action involved in the production, processing, preparation, or extraction of a controlled substance, from growing a marijuana plant to pressing pills.
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Distributing a controlled substance – This means exactly what it sounds like, delivering a drug to someone, even if there is no money involved.
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Possessing a controlled substance with the intent to distribute it – Possessing an illegal drug is a separate, and less severe, crime than manufacturing or distribution. However, if the government can prove a person had an intent to distribute the drugs in their possession, the penalties are the same as if they actually distributed them. The government can use prior drug sales, possession of equipment such as scales and baggies, and even the amount of drugs in someone’s possession as evidence of an intent to distribute. If a person is caught with five pounds of marijuana, for example, the government can charge them with having an intent to distribute marijuana.
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Importing a controlled substance – Like distribution, this is a straightforward crime involving the importation of illegal drugs into the U.S., usually by deceiving U.S. Customs or Border Patrol.
What are the penalties for a drug conspiracy charge?
The sentence for participating in a drug conspiracy depends on the type and quantity of drugs involved in the offense.
For marijuana, if there is no quantity of marijuana alleged, there is no mandatory minimum sentence, while the maximum sentence is 20 years. If there are 100 kilograms or more of a substance containing marijuana, there is a mandatory minimum sentence of 5 years and a maximum sentence of 40 years. If there are 1000 or more kilograms of a substance containing marijuana, there is a mandatory minimum sentence of 10 years and a maximum sentence of life in prison.
For cocaine and “crack” cocaine, if there is no quantity of cocaine or crack cocaine specified, there is no mandatory minimum sentence, while the maximum sentence is 20 years. If there are 500 grams or more of a substance containing cocaine or 28 grams or more of a substance containing crack cocaine, there is a mandatory minimum sentence of 5 years and a maximum sentence of 40 years. If there are 5 or more kilograms of a substance containing cocaine or 280 grams or more of a substance containing crack cocaine, there is a mandatory minimum sentence of 10 years and a maximum sentence of life in prison.
For methamphetamine, if there is no quantity of methamphetamine specified, there is no mandatory minimum sentence, while the maximum sentence is 20 years. If there are 5 grams or more of a substance containing methamphetamine, there is a mandatory minimum sentence of 5 years and a maximum sentence of 40 years. If there are 50 or more grams of a substance containing methamphetamine, there is a mandatory minimum sentence of 10 years and a maximum sentence of life in prison.
For heroin, if there is no quantity of heroin specified, there is no mandatory minimum sentence, while the maximum sentence is 20 years. If there are 100 grams or more of a substance containing heroin, there is a mandatory minimum sentence of 5 years and a maximum sentence of 40 years. If there is 1 or more kilograms of a substance containing heroin, there is a mandatory minimum sentence of 10 years and a maximum sentence of life in prison.
Law enforcement is also now prosecuting drug conspiracies involving opioids, especially fentanyl and fentanyl analogues. A controlled substance “analogue” is a chemical compound that is “substantially similar” to a controlled substance, both in chemical structure and in the effects it produces when consumed.
While fentanyl is a Schedule II drug, a fentanyl analogue is classified under Schedule I. There are no mandatory minimum sentences for drug crimes involving fentanyl or fentanyl analogues.
Possible Enhancements in Drug Conspiracy Cases
It’s important to be familiar with laws that “enhance” the sentences for certain drug offenses. These laws dramatically increase the mandatory minimum sentences in drug conspiracy offenses.
There are two ways that the government can apply these enhancements:
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If an individual dies or is seriously injured as a result of using the controlled substance involved in the drug conspiracy. This enhancement can only be applied if the government proves that the deceased individual would not have died or been injured but for the fact that they consumed the controlled substance involved in the offense.
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If the person being charged with a drug crime has one or more prior felony convictions for drug offenses. Under 21 U.S.C. § 851, the government must give notice to the court and the defendant that it is seeking this enhancement, and it must identify the particular prior convictions it is relying upon.
Read about our firm’s success in federal criminal cases.
To learn what happens in a federal criminal case, watch our federal crimes video.
If you want to know how to get the lowest possible sentence in federal court, watch our video on the Federal Sentencing
Defenses to a Drug Conspiracy Charge
There are six basic defenses to drug conspiracy crimes:
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There was no agreement – This is a straightforward defense that asserts the government cannot prove the existence of a conspiracy. No agreement exists, for example, where the individuals involved do not share a common goal and are not working together. Similarly, there may be an agreement between multiple people to accomplish something, but if the objective is not illegal, the agreement is not a conspiracy.
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The person charged did not intend to join the agreement – Like the defense that there was no agreement, this defense attacks the government’s case as lacking evidence. For there to be a conspiracy, one must intentionally join the conspiracy. This means taking an “overt action” to participate in the conspiracy. Jim and Bob may jokingly agree to rob a bank, and Bob may go out the next day and actually do it, but Jim is not guilty of conspiracy to rob a bank if Jim believed Bob was joking and he didn’t take any steps towards helping him rob that bank, such as renting a getaway car.
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The person charged was involved in a different conspiracy – This may sound counterintuitive, but a person has a valid defense if the conspiracy they are involved in is not the conspiracy they were charged with. The government may accuse a person of distributing heroin from their house, but if they were actually distributing marijuana, that’s a valid defense to the government’s accusations.
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The person charged withdrew from the conspiracy – Withdrawing from a conspiracy is a defense to a conspiracy, but it’s not enough to simply throw one’s hands up and say: “I quit.” In order to succeed with a withdrawal defense, a person has to have been pro-active in withdrawing from the conspiracy. This means showing that they took an affirmative action to stop participating in the conspiracy, that they informed your co-conspirators of their withdrawal, and that they withdrew before the conspiracy was complete. Sometimes, it also means a person withdrawing has to take steps to prevent the conspiracy from accomplishing its criminal objective, such as by notifying law enforcement.
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The person charged was entrapped by law enforcement – While this is a difficult defense to succeed on, it can be powerful when used correctly. Entrapment occurs when law enforcement essentially “traps” a person by convincing them to commit a crime they ordinarily wouldn’t have committed. The key to an entrapment defense is to show that the person wouldn’t have committed the crime but for the government’s actions to entice them. It’s not entrapment just because an undercover agent or government informant created an opportunity for a person to sell him drugs, but if they threaten that person, harass them, or pressure them to sell illegal drugs, that may be entrapment. Entrapment is similar to duress, which is a defense one can use if they were physically threatened to do something illegal.
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There was an illegal search or interrogation – The U.S. Constitution protects us from “unreasonable searches and seizures.” This means law enforcement generally has to have a valid search warrant before wiretapping a person’s phone, searching their house for drugs, or pulling them over to search their car. This also means law enforcement has to read you your Miranda rights if you are arrested, including your right to remain silent and not incriminate yourself. If the person charged can prove that the warrant for a wiretap or search of their house is not supported by probable cause or that law enforcement conducted a traffic stop without having any reasonable suspicion that that person committed a crime, they can ask a court to suppress evidence that was seized by law enforcement, meaning the government cannot use it against them in their case. In drug cases, that usually means the government cannot introduce the drugs themselves as evidence, likely killing their case. Similarly, if a person can prove law enforcement did not advise them of their right to remain silent, that person can have any self-incriminating statements they made suppressed. It is also always a good idea to determine whether any search that led to the discovery of drugs, currency or other evidence was legal. If evidence was discovered in a vehicle, the attorney will have to determine if the officer who stopped the vehicle had a sufficient reason to do so, or if voluntary consent was given by the person who had possession of the vehicle. If drugs were discovered in a home, the attorney will have to verify that the search was based upon a valid search warrant or other probable cause or consent. If the police violated a person’s rights, a judge may be required to suppress any evidence that was seized.
There are several other potential defenses available to a person accused of a drug conspiracy or another federal drug crime. In some cases, an affirmative defense like entrapment or duress may be available and successful if diligently pursued. A good lawyer will also consider whether other affirmative defenses may apply, depending on the specific facts of the case.
If you have been charged with a federal drug crime such as conspiracy, you need the assistance of an experienced federal criminal lawyer who will defend your legal rights. For many years, our firm has successfully represented clients charged with federal drug conspiracy and related offenses. We have won several federal drug trials and have successfully resolved others with very favorable pretrial rulings and plea agreements.
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Forfeiture and Seizure of Property in Drug Conspiracy Cases
Being charged with a federal drug crime may result in the seizure and forfeiture of property, even if the person is never actually convicted of any offense. Any property that the government can show came from a drug-related crime will be forfeited. In addition, any property which was used or intended to be used to commit or facilitate such a crime will be forfeited. A person convicted of engaging in a criminal enterprise will also forfeit any interest or rights in the continuing criminal enterprise.
Under 21 U.S.C. § 853, the government can seize and keep any property and money in a person’s possession that was “obtained, directly or indirectly, as a result of” a drug offense or any property used “to facilitate the commission of” such an offense. There is a lower “burden of proof” in forfeiture cases than required for a criminal conviction, meaning the government doesn’t have to prove beyond a reasonable doubt that the person obtained the property from a criminal source or that they used the property in connection with their alleged crimes.
Of course, there are ways to contest a forfeiture or seizure of property. Our firm has won criminal forfeiture trials, and also negotiated the return of our client’s property and currency that had been seized by federal law enforcement.
We have also helped many people get out of federal prison early.
Recently, we have also been very successful helping people get an early release from federal prison. Recent changes in federal law, and Justice Department policies, have allowed us to pursue “compassionate release” for inmates serving lengthy sentences at the federal Bureau of Prisons. Our motions address not just the need for early release due to health concerns, but also unfairly harsh sentences that were imposed years ago.
If you want to learn more about how we may be able to getting someone released from federal prison, read more about our success in compassionate release motions.
I hired Mr Pate to handle my federal 2255 appeal which was for ineffective council of a former attorney. He spent countless hours with my case load filing paperwork, meeting with me, more than one hearing in front of multiple judges etc. my 2255 was won and I had a sentence reduction fo all his hard work. 2255 are very hard to win and the odds are slim so if you need a great lawyer that will work hard for you and argue for you even harder in Court, you need to call Page! He and Mr Church both had my back all the way thru. Thanks to them both but especially Page Pate!
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