Federal Criminal Defense Lawyer - Money Laundering

What is money laundering?

Money laundering is the process of making illegally-gained money (e.g., drug sales and fraud) look like it was earned legally. This often involves depositing the illegal-gained funds in a bank, passing the funds through a business, purchasing expensive goods (e.g., jewelry or a car) with the funds, or giving the funds to another individual. 

The Government rarely charges individuals with just money laundering. Normally, the Government will charge an individual with the the underlying crime (such as a drug offense or a fraud offense) along with money laundering. If you've been charged with a money laundering offense, you should contact a federal criminal defense lawyer to ensure that your rights are protected.

How does the Government prove money laundering?

Money laundering is a federal crime under 18 U.S.C. 1956 and 1957, and it is most commonly charged under Section 1956. To prove money laundering under Section 1956, the Government has to showing the following elements beyond a reasonable doubt:

1. The person engaged in a "financial transaction" involving proceeds of an illegal activity.
2. The person knew that the money that was the “proceeds” of criminal activity.
3.  The person did the transaction with the “intent to promote” the criminal activity or to hide the money (such as evading reporting requirements).

Section 1957 is different for two reasons. First, it involves a "monetary transaction" which must involve a financial institution (most commonly a bank). Second, the transaction must involve more than $10,000.

The Government can also charge money laundering as a conspiracy. Conspiracy charges are often brought against people who did not play a large role in the underlying offense, but who the Government contends knew the money was "dirty" and agreed to participate in laundering the funds. 

Examples of money laundering

• Jack sells drugs to several individuals and receives cash in return. Jack then buys an expensive watch and an expensive vehicle with the illegally-gained cash. Under this scenario, Jack can be charged with two counts of money laundering under 18 U.S.C. 1956.
• Jane defrauds several investors out of $100,000 and wires the funds into a secret bank account. A colleague eventually tells law enforcement about the bank account. Under this scenario, Jane can be charged with money laundering under 18 U.S.C. 1957.
• Virginia's boyfriend, Michael, was a drug dealer who kept his illegal conduct from her. Michael asked Virginia to deposit a large amount of cash into her bank account. Michael admitted that the cash was from illegal activity but told her it was a one-time thing. Virginia agreed and attempted to deposit the funds but the bank refused. Under this scenario, Virginia could be charged with conspiring to commit money laundering.

What are the penalties for money laundering?

Money laundering is a felony offense which can carry up to 20 years in prison. The severity of the sentence is often determined by the amount of money involved in the transactions as well as the nature of the underlying offense.

What are the defenses to money laundering charges?

Money laundering cases are often not straight forward. There are often multiple banks accounts, legitimate business ventures, and people who knew of no criminal activity involved in the financial transfers. The lack of clarity allows for a federal criminal defense lawyer to undermine the Government's allegations. Below are some of the most common methods of attacking the Government's case:

• There was no underlying illegal activity. This is the most obvious  defense. For instance, in a case where the Government alleges money laundering as the result of a Ponzi scheme to defraud investors, it must first be able to show that there was a Ponzi scheme.

• No knowledge the money was illegally obtained. In our scenario above, Michael told Virginia that the cash was illegally obtained. But if Michael told Virginia that the funds were lawfully obtained through his legitimate business, and if Virginia made no attempt to evade reporting requirements, then the Government likely could not pursue money laundering charges against her.

• The Government cannot trace the funds. When money passes through multiple bank accounts, changes hands several times, and is co-mingled with legitimate funds, it can be difficult for the Government to trace the ill-gained funds. For this reason, a defendant may benefit from hiring an independent forensic accountant to review all financial accounts to determine if the Government has properly traced the funds in question.

What sentence will I receive if I'm convicted of money laundering?

Sentences in federal court are largely determined by the statutory maximum and minimum, the Federal Sentencing Guidelines, various factors under 18 USC 3553, and your judge's discretion. In every case, the judge starts with the Federal Sentencing Guidelines which will recommend a sentence within a particular range of months.

With money laundering offenses, the Guidelines focus on the amount of money involved and increase the penalties as the amount of money increases. For example, the Guidelines may recommend that a person convicted of laundering $10,000 be sentenced to between 10 and 16 months in prison. But the Guidelines may recommend a sentence of between 33 and 44 months in prison for someone convicted of laundering $250,000.

The Guidelines also tack on what are called 'enhancements' which can cause the recommended sentence to increase quickly. For instance, a defendant who laundered $250,000 that came from the sale of drugs may see the recommended sentence increase to between 63 and 78 months. After the judge determines the Guidelines range, the Court will consider other factors (such as who you are as a person) before determining a sentence the Court believes is reasonable. For this reason, it is not uncommon for judges to give sentences that are below the Guidelines range (if sentencing is handled appropriately by the defense lawyer).

If you or someone you know have been accused of money laundering, you should consult with an experienced federal criminal defense lawyer as soon as possible.