Federal Money Laundering Defense: 18 USC 1956 and 1957.

At Spodek Law Group, our federal money-laundering defense is highly focused on identifying which federal money-laundering theory is being charged. The federal government can pursue one or more of several potential theories, with some being much harder to defeat than others. Broadly speaking, federal charges for money laundering will either be brought under 18 U.S.C. 1956 or 18 U.S.C. 1957. If you have received a grand jury subpoena, you need to know which law is on the table and what type of conduct is considered a crime under it.

18 U.S.C. 1956: The Federal Money-Laundering Statute

The federal money-laundering law (18 U.S.C. 1956) prohibits financial transactions involving actual or purported proceeds of “specified unlawful activity” (SUA). Section 1956 provides for the criminal prosecution of those who conduct, or attempt to conduct, transactions in such funds to:

• Promote the commission of a “specified unlawful activity” under federal law, or
• Conceal or disguise the nature, source, ownership, or location of the proceeds, or
• Evade a state or federal transaction reporting requirement (i.e. To evade an IRS or Bank Secrecy Act filing).

18 U.S.C. 1957: The Federal Monetary Transaction Statute

The federal monetary transaction statute (18 U.S.C. 1957) prohibits individuals from knowingly spending $10,000 or more that they know “and is derived from specified unlawful activity” This statute is narrower than 18 U.S.C. 1956, and it is one of many possible charges for money laundering in the United States. When facing charges under the federal monetary transaction statute, federal money-laundering defense counsel will focus on proving the government cannot trace the transaction to “specified unlawful activity,” that the federal government cannot prove that you knew the funds were criminally derived, and that the prosecution cannot prove the government’s calculations of criminally derived funds.

How do Prosecutors Connect a Transaction to Criminal Proceeds?

To connect a financial transaction to criminal proceeds in order to prosecute a federal money laundering offense, the federal government must satisfy the applicable requirements of 18 U.S.C. § 1956(a), and then, for a subsection requiring actual proceeds, prove beyond a reasonable doubt that the transaction involved proceeds derived from a “specified unlawful activity.” While that sounds like an almost insurmountable requirement, it is one that provides both federal and state prosecutors extraordinary leeway to prosecute a wide range of conduct. At Spodek Law Group, our defense strategy for federal money laundering offenses involves scrutinizing the government’s proof with respect to the following:

The Alleged Unlawful Activity

Contrary to what you might expect, the government doesn’t have to separately charge you under 18 U.S.C. 1956’s predicate offense for it to consider the funds involved “criminally derived.” The government must prove each element of the charged subsection, including, where applicable, that the transaction in fact involved the proceeds of specified unlawful activity The U.S. Attorney’s Office or the DOJ could charge you with money laundering alone, or it could charge you with money laundering alongside a separate charge for the underlying unlawful activity.

The Scope of “Specified Unlawful Activity”

If you are concerned about being prosecuted for a federal money laundering offense, you need to know how broad the definition of “specified unlawful activity” is. The federal money-laundering statute incorporates hundreds of federal and state offenses into its definition of “specified unlawful activity.” While this includes high-profile crimes such as federal and state drug crimes, bribery, fraud, and smuggling, it also includes more mundane offenses, including “certain offenses specifically listed in 18 U.S.C. § 1956(c)(7),” among many others.

The Scope of “Financial Transactions”

Under 18 U.S.C. § 1956(c)(4), “financial transaction” is also broadly defined. Under 18 U.S.C. § 1956(c)(3), “transaction” includes a purchase, sale, loan, pledge, gift, transfer, delivery, or other disposition, while “financial transaction” is separately defined in § 1956(c)(4) to cover specified transactions affecting interstate or foreign commerce or involving a qualifying financial institution. This broad language means that ordinary deposits, purchases, withdrawals, and transfers can qualify as “transactions.” Further, a transaction doesn’t necessarily need to involve a bank to create exposure under Section 1956, and the statute’s broad language creates additional opportunities for a diligent defense counsel to question the government’s calculations.

Where can a defense challenge knowledge, tracing, and investigative conduct?

We can defend against charges involving unlawful conduct by questioning, among other things: - Your knowledge of the funds’ unlawful source. For example, even if you knew about an underlying “specified unlawful activity,” you may not have had knowledge that the funds involved came from that activity. Alternatively, you may have mistakenly believed that the funds involved came from a lawful source.

• Whether the funds involved came from “specified unlawful activity.” Although the federal government’s definition of “specified unlawful activity” is very broad, it is still possible that the funds involved came from a source that does not meet this definition.
• The government’s tracing and accounting analysis. In complex federal money-laundering cases, the government’s tracing and accounting analysis should be open to questioning. We rely on financial analyses.
• The government’s investigative conduct. The evidence presented against you in court must be admissible, and you are entitled to fully contest evidence obtained by the government through an unlawful search, seizure, or interception. For example, we can seek to exclude or suppress illegally obtained evidence, including that obtained during an unlawful warrantless search, under a warrant lacking probable cause, etc. You should not assume that your openness does not fully insulate you from prosecution under 18 U.S.C. 1956. For example, conducting transactions in the open does not fully insulate you from prosecution under a theory of money laundering under 18 U.S.C. 1956. When we develop a federal money-laundering defense strategy, we take a close look at the specific circumstances of your case. We can assess all potential defenses, and, if necessary, we can advise you if criminal charges under the federal money-laundering statute are warranted by the facts at hand. If you need to retain a federal money-laundering defense attorney with experience in high-stakes government enforcement matters, Spodek Law Group is prepared to represent you.

What do the statutory maximums and guidelines mean for sentencing?

The statutory maximums and the federal guidelines both play significant roles in determining the actual sentence imposed in cases involving 18 U.S.C. 1956 and 18 U.S.C. 1957. Under 18 U.S.C. 1956, the statutory maximum for imprisonment is twenty years per count, while fines can range up to $500,000 or twice the value of the property involved in the transaction, using whichever of these two monetary measures is greater. Under 18 U.S.C. 1957, the statutory threshold of the amount of property involved in the transaction is “greater than $10,000,” and the statutory maximum for imprisonment is generally ten years per count, except for certain pre-retail medical-product offenses. Along with statutory maximums, the U.S. Sentencing Guidelines provide the guidelines for imposing sentences in federal money laundering cases. When sentenced under these guidelines, a defendant’s prison sentence will be calculated starting with a base offense level. The base offense level will then be adjusted for various factors, and will be combined with the defendant’s prior criminal history to calculate a sentencing range. Federal judges are required to consider these ranges when they sentence defendants, but they must give their justification if they determine a sentence that falls above or below the guidelines’ calculated range. Given the significant prison time and financial penalties involved, if you are at risk of being prosecuted for a federal money laundering offense, you should make informed decisions about how to move forward. If you need a federal money laundering defense lawyer with experience in government enforcement matters, Spodek Law Group is prepared to help. Our attorneys will work directly with you to protect you against criminal charges.

When can forfeiture, seizures, and post-contact conduct create separate risks?

Money laundering can be charged on its own, but money laundering counts can also be charged alongside the offense that generated the proceeds. In some cases, the money laundering charges can actually increase your total exposure, as they add additional sentencing and forfeiture exposure on top of the original offense’s criminal exposure.

Money laundering is another example of a crime for which post-contact conduct can have a significant impact on you. For example, after your initial contact with the government, you should not destroy evidence, delete records, or move assets. Such conduct can create additional legal concerns (such as obstruction of justice) that can create additional legal risks in addition to the charges for which you were contacted. To protect yourself, you should not:

• Delete or destroy any records;
• Discuss the facts of the case with investigators;
• Change the way you normally do business;
• Make any changes to your financial transactions; or,
• Communicate with any potential witnesses. If you have been contacted with respect to a federal money-laundering investigation, contact an attorney immediately. Our team of highly experienced defense lawyers is available to represent you both before and after indictment, with the goal of helping you to avoid criminal prosecution.

Speak With Counsel Before You Answer Anything

If agents have contacted you, the order matters: counsel first, answers second. Spodek Law Group has been practicing since 1976 and defends federal matters nationwide, coast to coast, from offices in New York, Brooklyn, Queens and Los Angeles. Call 888 348 8028.