Justices narrow money laundering

High court ruling could make cases harder to prosecute

June 03, 2008|By David G. Savage | David G. Savage,LOS ANGELES TIMES

WASHINGTON - Hiding $81,000 in cash under the floorboard of a car and driving toward Mexico is not enough to prove that the driver was guilty of money laundering, the Supreme Court ruled yesterday. Instead, the court said, prosecutors must also prove that the driver was traveling to Mexico for the purpose of hiding the true source of the funds.

This was one of two decisions handed down yesterday that could make it harder for prosecutors to win convictions for money laundering. The anti-money-laundering law has been one of the government's most powerful weapons in the war on drugs.

In the second ruling, the court said the law applies only to the profits of an illegal operation, not all of the cash it generates.

Although other laws can be used to prosecute smugglers of cash, Congress hoped to interrupt the drug trade when, in 1986, it made it a separate crime to transport cash into or out of the country to carry on "unlawful activity" or to "conceal or disguise" the source of the money.

The law sometimes led to convictions and long prison terms for defendants who could not explain why they had large quantities of cash.

Defense lawyers have complained that the anti-money-laundering law is used to press defendants to plead guilty to another crime, such as a drug dealing. A conviction for money laundering can mean up to 20 years in prison.

A Washington lawyer who represents white-collar defendants said the justices were concerned about the law being used too broadly.

"The decisions today significantly raise the bar for prosecutors to prove money-laundering charges," said Jeffrey T. Green, who filed a friend-of-the-court brief for the National Association of Criminal Defense Lawyers. Most people who carry large amounts of cash hide it for security, he said, so that alone should not be enough to prove that a crime has been committed.

On July 14, 2004, Humberto Cuellar of Acuna, Mexico, was driving very slowly in south Texas, headed toward the Mexican border. He had run off the road at one point, and a patrol officer stopped him and noticed that his Volkswagen Beetle did not have a license plate.

When officers searched the car, they found $81,000 in cash hidden in a secret compartment under the floorboard. Cuellar changed his story several times and could not explain where he was going or where he had gotten the money.

He was convicted of money laundering and sentenced to 6 1/2 years in prison. The Supreme Court reversed his conviction in a 9-0 vote.

"We agree with [Cuellar] that merely hiding funds during transportation is not sufficient to violate the [money-laundering] statute, even if substantial efforts have been expanded to conceal the money," Justice Clarence Thomas said. The government did not prove that Cuellar was taking the money to Mexico for the purpose of concealing it, Thomas said.

In the second ruling, the court voted 5-4 to reverse an Indiana man's conviction for money laundering, which was based on the cash from an illegal lottery. Efrain Santos was given five years in prison for his illegal gambling operation and nearly 18 years more for money laundering.

Justice Antonin Scalia said the law refers to the "proceeds of some form of unlawful activity." Congress did not define those words, and Scalia said the court should give the benefit of the doubt to the defendant.

Chief Justice John G. Roberts Jr. and Justices Anthony M. Kennedy, Steven G. Breyer and Samuel A. Alito Jr. dissented, saying the law was intended to apply to all of the cash from an illegal operation, not just the profits.

David G. Savage writes for the Los Angeles Times.

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