Federal Money Laundering Charges: 18 U.S.C. § 1956 and § 1957

Federal Money Laundering Charges: 18 U.S.C. § 1956 and § 1957

You deposited your paycheck last Friday. Direct deposit, like always. $15,000 for a month of legitimate consulting work. Real hours. Real deliverables. Real client satisfaction.

That deposit is now the basis for federal money laundering charges.

Welcome to Spodek Law Group. Our goal is to explain something that transforms ordinary businesspeople into federal defendants: the money laundering statutes don’t require laundering anything. They don’t require concealment. They don’t require you to know about any underlying crime. Under 18 U.S.C. § 1957, the simple act of depositing more than $10,000 in funds that prosecutors later trace to criminal activity is itself a federal crime – even if you had no idea where those funds came from, even if your work was entirely legitimate, even if all you did was put your paycheck in your bank account.

Here’s what makes money laundering charges uniquely terrifying. The government doesn’t have to prove what crime generated the money. They don’t have to charge anyone with the underlying offense. They don’t have to prove that offense ever happened. They just need circumstantial evidence that the funds came from “some form of activity that constitutes a felony.” You can be convicted of laundering proceeds from a crime that was never identified, never charged, never proven.

Your Paycheck Is A Federal Crime: Section 1957 Explained

Most people hear “money laundering” and imagine drug dealers hiding cash in offshore accounts. Suitcases of currency. Shell companies in the Caymans. The movie version of financial crime.

Thats not what Section 1957 prohibits.

Section 1957 makes it a federal crime – punishable by up to ten years in prison – to conduct any monetary transaction exceeding $10,000 in funds derived from specified unlawful activity. Theres no requirement that you conceal anything. Theres no requirement that you structure anything. The transaction itself is the crime.

Heres what this means practicaly. Your employer commits wire fraud you dont know about. The fraud generates revenue. That revenue pays your salary. You deposit your salary in your bank account. The deposit exceeds $10,000.

You just committed federal money laundering.

The work you did was real. Your hours were accurate. Your deliverables were excellent. None of that matters. Under Section 1957, the crime is conducting a transaction in criminally-derived funds. Your salary derived from fraud proceeds. You conducted a transaction. Your guilty.

The statute wasnt designed to catch employees who unknowingly receive tainted salaries. It was designed to punish drug traffickers who spent there cash on mansions and sports cars. But the statutory language dosent distinguish between Pablo Escobar buying a yacht and you depositing your consulting fee.

At Spodek Law Group, we’ve represented clients who had no idea there employer was under investigation until FBI agents arrived at there door asking about salary deposits. By then, every paycheck they’d deposited was a potential federal count.

250 Ways To Become A Money Launderer

The money laundering statutes dont apply to all crimes. They apply specificaly to “specified unlawful activities” – a defined list of predicate offenses that can trigger laundering charges.

Heres the problem. That list contains over 250 federal offenses.

Wire fraud is a predicate. Mail fraud is a predicate. Bank fraud is a predicate. Securities fraud is a predicate. Healthcare fraud is a predicate. Drug trafficking is a predicate. Human trafficking is a predicate. Bribery is a predicate. Smuggling is a predicate. Passport fraud is a predicate. Environmental crimes are predicates.

And heres the part that should genuinly terrify you. Every RICO predicate offense is automaticaly a money laundering predicate. The list keeps expanding.

OK so think about what this means for a typical white collar case. Prosecutors charge wire fraud. Then they examine every bank transaction you made after recieving fraud proceeds. Each deposit over $10,000? Section 1957 count. Each transfer over $10,000? Additional count. Each major purchase? Additional count.

The same conduct that constituted one wire fraud count now generates dozens of money laundering counts. Not because you actualy laundered anything. Not because you concealed anything. Just because you conducted transactions in funds that derived from the wire fraud.

This is why money laundering charges multiply exposure exponentialy. Wire fraud carries twenty years. Section 1957 carries ten years per count. Ten transactions means ten counts means one hundred years of theoretical exposure on top of the underlying wire fraud.

The Crime They Never Have To Prove

Heres something that will fundamentaly change how you understand money laundering prosecutions. The government dosent have to prove what crime generated the funds.

Read that again.

Under established precedent, prosecutors dont have to prove the elements of any predicate offense. They dont have to identify a specific victim. They dont have to show when or where the underlying crime occured. They just need circumstantial evidence that the funds came from “some form of activity that constitutes a felony.”

This is explicit in the statute. The government must prove that the property “represents the proceeds of some form, though not necessarily which form, of activity that constitutes a felony under State, Federal, or foreign law.”

Heres how this plays out in real cases. Prosecutors trace funds flowing through your account. They show that the funds originated from a buisness later characterized as fraudulent. They dont have to prove who committed the fraud. They dont have to prove what specific misrepresentations were made. They just have to show the funds came from “some” felony activity.

You can be convicted of money laundering based on the proceeds of a crime that was never charged, never prosecuted, never proven beyond a reasonable doubt. The predicate offense can be completley theoretical.

Todd Spodek has seen this pattern repeatedly. Prosecutors who cant prove the underlying offense to a jury’s satisfaction instead prove money laundering – which requires less proof but carrys the same catastrophic consequences.

The irony is crushing. Money laundering was designed as an add-on charge to punish drug kingpins. It’s become a substitute charge that allows prosecution when the underlying crime cant be proven.

Consider what this means for jury trials. In a wire fraud case, the government must prove specific misrepresentations made to specific victims. Witnesses testify. Documents are produced. The defendant can challenge the evidence point by point. In a money laundering case built on unproven predicates, the government just proves that money flowed through accounts connected to suspicious activity. Theres no specific crime to defend against because no specific crime has been alleged.

The defense lawyer asks: “What crime are we supposed to have helped launder?” The prosecutor responds: “Some form of felony activity – we dont have to specify which one.” Try explaining that to a jury.

Willful Blindness: When Not Knowing Becomes Knowing

The money laundering statutes require proof that you “knew” the property was derived from criminal activity. That sounds protective. You didnt know, so your not guilty.

Heres how courts have interpreted “knowledge.”

Willful blindness – deliberately avoiding knowledge of criminal origins – counts as knowledge. If you suspected funds might be tainted but chose not to investigate, courts will treat that as if you actualy knew.

Think about what this means for buisness relationships. Your client pays you for legitimate work. The payment is unusualy large. You think to yourself: “I wonder where they got this money.” But you dont ask questions because you dont want to offend an important client.

Under the willful blindness doctrine, that decision not to ask questions becomes evidence of guilt. Your deliberate avoidance of information is treated the same as actualy having the information.

The defense that would work in everyday life – “I trusted my buisness partner, so I didnt interrogate there finances” – becomes evidence of criminal intent. Not asking questions is interpreted as knowing the answers and choosing not to confirm them.

Heres the practical consequence. Every red flag you ignored, every question you didnt ask, every due diligence step you skipped becomes evidence that you willfully blinded yourself to the truth. The government will argue that you knew and chose not to know.

Courts have upheld willful blindness findings based on remarkably thin evidence. A defendant who recieved payments in cash instead of wire transfers – willful blindness. A defendant whose client paid from an offshore account – willful blindness. A defendant who didnt ask why the fee was so high – willful blindness. The doctrine has expanded so far that ordinary trust in buisness relationships becomes evidence of criminal intent.

The burden effectivly shifts. Instead of the government proving you knew, you have to explain why you didnt investigate further. The presumption of innocence collides with the doctrine of willful blindness.

20 Years Versus 10 Years: Two Statutes, Two Weapons

Federal prosecutors have a choice when charging money laundering. Section 1956 or Section 1957. Understanding the diffrence is essential to understanding your exposure.

Section 1956 is the “real” money laundering statute. It requires proof that you conducted a financial transaction with one of four specific intents: to promote further crime, to conceal the nature of the funds, to avoid reporting requirements, or to evade taxes. Maximum penalty: twenty years.

Section 1957 is the “simpler” statute. It just requires proof that you conducted a monetary transaction over $10,000 in criminally-derived property, knowing it was criminally derived. No intent to conceal. No intent to promote. Just the transaction. Maximum penalty: ten years.

Heres the strategic reality. Section 1956 is harder to prove but carrys a higher penalty. Section 1957 is easier to prove but carrys a lower penalty. Prosecutors often charge both statutes on the same conduct – they want options.

If they can prove concealment intent, Section 1956 gives them twenty years per count. If concealment intent is questionable, Section 1957 still gives them ten years per count. Theyre not choosing one weapon. Theyre bringing both.

This is why defendants facing money laundering charges often see indictments with counts under both sections. The government wants the jury to have choices. Convict on Section 1956 if your persuaded of concealment intent. Convict on Section 1957 if your only persuaded of knowledge. Either way, the defendant goes to prison.

At Spodek Law Group, we analyze which statute the evidence actualy supports. Sometimes Section 1956 charges should be dismissed because theres no concealment evidence. Sometimes Section 1957 charges fail because the $10,000 threshold wasnt met. Understanding the statutory nuances changes the defense strategy.

Roman Sterlingov Got 12.5 Years: What 2024-2025 Sentences Look Like

Abstract discussion of penalties means nothing without real numbers. Heres what money laundering sentences actualy look like in 2024-2025.

Roman Sterlingov operated Bitcoin Fog – a cryptocurrency mixing service that prosecutors said was used to launder drug proceeds and stolen funds. In November 2024, he recieved 12 years and 6 months in federal prison. Thats not the twenty-year maximum, but its still over a decade of incarceration for running what Sterlingov claimed was a privacy service.

Mark Scott was a lawyer who helped launder aproximately $400 million from OneCoin – a massive cryptocurrency fraud scheme. In January 2024, he recieved 10 years in federal prison. Scott had argued he was just doing legal work for clients. The jury didnt buy it. The government argued he knew the funds were fraud proceeds and structured transactions to conceal there origins.

Changpeng Zhao – former CEO of Binance, the worlds largest cryptocurrency exchange – recieved only four months. But his crime wasnt money laundering itself. It was failing to maintain an adequate anti-money laundering program. The disparity shows how sentencing depends on the specific charges and facts.

The U.S. Sentencing Commission reports that in fiscal year 2024, the average sentence for money laundering was 62 months – just over five years. But 44.6% of sentences were variances from the guidelines, meaning judges frequently departed from recomended ranges based on individual circumstances.

Heres what the data dosent capture. The psychological reality of facing decades of theoretical exposure. When your indictment contains fifteen Section 1956 counts and twenty Section 1957 counts, the math says 550 years. Nobody serves 550 years. But the leverage that number creates is immense. Plea negotiations happen in the shadow of impossible numbers.

The conviction rate for federal money laundering cases mirrors the overall federal rate – aproximately 90%. When prosecutors bring these charges, they almost always win.

The Sentencing Commission data reveals something else important. In fiscal year 2024, there were 1,095 money laundering cases – up 45% from fiscal year 2020. Money laundering prosecutions are increasing, not decreasing. The DOJ is dedicating more resources to these cases. Cryptocurrency has created new enforcement priorities. The trend line points toward more prosecutions, not fewer.

Your Car, Your House, Your College Tuition: Every Transaction Is A Count

Heres the consequence cascade that transforms one investigation into dozens of counts.

Start with a single predicate offense. Wire fraud, for example. Fraud proceeds flow to a buisness account. From there, they flow to personal accounts. From personal accounts, they fund ordinary life.

Mortgage payment. Thats a transaction in criminally-derived property. Car payment. Thats another transaction. College tuition. Another transaction. Vacation. Another transaction. Home renovations. Another transaction.

Each payment over $10,000 from funds that derived from the wire fraud is a separate Section 1957 count. Each payment made with intent to conceal is a separate Section 1956 count. The ordinary act of living your life – paying your bills, maintaining your home, educating your children – becomes evidence of federal crime.

This is how peripheral participants end up facing exposure that rivals the principal offenders. The person who actualy committed the wire fraud faces wire fraud counts. The person who unknowingly recieved proceeds and spent them on normal life faces money laundering counts. The statutory maximums can be comparable.

Asset forfeiture compounds the problem. Upon conviction, the government can seize any property “involved in” the money laundering offense or “traceable to” such property. Your house – if purchased with tainted funds. Your car – if purchased with tainted funds. Your investment accounts – if funded with tainted money.

Prosecutors dont just want prison time. They want everything you own.

The forfeiture provisions are particulary devastating for family members. If your spouse deposited tainted funds into a joint account, and that account was used to purchase the family home, the government can seek forfeiture of the home. Your children’s college fund, if traceable to tainted money, is subject to seizure. The consequences ripple outward to people who had nothing to do with any crime.

Innocent owner defenses exist, but theyre difficult to prove. You have to demonstrate that you had no knowledge of the illegal activity and that you took all reasonable steps to discover it. In other words, you have to prove a negative – that you couldnt have known.

When Spodek Law Group Takes Your Call

If your reading this because investigators asked about your bank deposits, because a buisness partner mentioned grand jury subpoenas, because your accountant told you something wasnt right with the source of funds – the time for research is over. The time for action began yesterday.

Federal money laundering investigations move methodicaly. By the time you know about them, prosecutors have already traced every transaction, every deposit, every purchase. There mapping the flow of funds backward to there source. There not exploring wheather a crime occured. There building the case to prove it.

The decisions you make in the first 72 hours after learning your under investigation often determine wheather you face trial or negotiate from strength. People who panic and talk to agents create evidence against themselves. People who immediately invoke there rights and engage counsel preserve options.

Call 212-300-5196 for a confidential consultation. The call is protected by attorney-client privilege. Nothing you tell us can be used against you. That means you can be completley honest about what happened – even if you think the funds might have been tainted.

Money laundering charges are survivable. The 90% conviction rate reflects cases that went all the way through the system – not investigations declined, charges dismissed, or pleas negotiated to lesser offenses. Many investigations never result in indictment. Many indictments get resolved favorably. The universe of possible outcomes is larger then conviction statistics suggest.

The defenses that work in money laundering cases include: lack of knowledge (you genuinly didnt know the funds were criminally derived), no predicate offense (the underlying crime never actualy occured), the $10,000 threshold wasnt met, the transaction wasnt in furtherance of any concealment, and statute of limitations (conduct occured more then five years ago).

Spodek Law Group handles federal criminal matters across the country. We understand how Section 1956 and Section 1957 interact. We understand the willful blindness doctrine and how to defeat it. We understand the consequence cascade that transforms one investigation into dozens of counts. We’ve helped clients navigate that exposure and emerge with outcomes that seemed impossible when they first called.

Your paycheck is federal jurisdiction. Your mortgage payment is exposure. Your car purchase is a potential count. Thats the reality of money laundering law in 2025. Understanding that reality is the first step toward surviving it.