This straightforward statutory question has roiled the lower federal courts, prompting a complaint by two conservative members of the federal appeals court in New Orleans earlier this year that the government’s expansive interpretation of the most commonly used money-laundering statute amounted to “prosecution run amok.”
That complaint, which came in a dissenting opinion, was perhaps what led the Supreme Court to decide, over the Justice Department’s opposition, to review the decision that had prompted it. The case is an appeal by a man who was stopped on a Texas highway on his way to the Mexican border and found to be carrying $83,000 in cash hidden under the floorboards of his car.
The government’s theory was that the driver’s behavior in concealing the cash met the description of international money laundering, defined in a 1986 statute as transportation or transmission designed to “conceal or disguise the nature, the location, the source, the ownership, or the control” of the proceeds of illegal activity.
The lower federal courts are split over whether “conceal” should be understood in the literal sense as simply being hidden, or whether Congress meant to criminalize only the hiding or disguising of cash with the intent to create the false appearance that it was obtained legitimately.
The money-laundering statute at issue is a powerful prosecutorial tool because of the heavy penalties it imposes: up to 20 years’ imprisonment and a fine of either $500,000 or twice the value of the transaction, whichever is greater. While there are several money-laundering laws on the books, the one involved in this case, the Money Laundering Control Act, accounted for 62 percent of convictions for all related crimes last year, nearly 1,000 convictions.
The case, Cuellar v. United States, No. 06-1456, concerns a section of the law that applies to transportation of “the proceeds of some form of unlawful activity” into or out of the United States. The driver, Humberto Regalado Cuellar, was convicted under that section and sentenced to six and one-half years in prison. He was not charged under another law that applied to his conduct, a statute that makes it a crime to carry more than $10,000 in cash across the border without reporting it. That law carries a much lighter sentence.
Supported by a friend of the court brief by the National Association of Criminal Defense Lawyers, Mr. Cuellar is arguing that federal prosecutors are aggressively stretching the meaning of the money-laundering law far beyond the traditional context and definition of money laundering. Money laundering was long understood to mean investing proceeds in a legitimate enterprise, so their origins would be obscured and the money would appear to be clean when recovered.
At the least, Mr. Cuellar’s lawyers argue, the money needs to be used in a manner that creates the appearance of legitimate wealth, not hidden under the floorboards of a car.
A three-judge panel of the United States Court of Appeals for the Fifth Circuit initially accepted that argument and overturned Mr. Cuellar’s conviction. The full 16-member court then reheard the case and reinstated the conviction, 13 to 3. The majority said that because “Congress had chosen the broad, unqualified word ‘conceal,’” there was no reason to apply a narrower definition. “Simply taking steps to hide illicit funds is sufficient to prove concealment,” the Fifth Circuit said.
In a dissenting opinion, Judge Jerry E. Smith accused the government of “making a mockery of the concept of money laundering.” Judge Smith said that under the majority’s definition, a “young petty thief” who stole a small sum and carried it across the border in his shoe to enjoy a night “at the bars of Nuevo Laredo” would be guilty of international money laundering and face up to 20 years in prison.
These were among the other developments at the court.
Special Education
For the second time in a week, the court bypassed the chance to clarify the obligation of public school systems to reimburse parents who choose to send children with disabilities to private school without trying an available public school program first.
A recusal by Justice Anthony M. Kennedy left the court in a 4-to-4 deadlock last week in a case from New York City. On Monday, Justice Kennedy recused himself again, this time in a case from Long Island, Board of Education of Hyde Park v. Frank G., No. 06-580, leading the court to turn the case down.
This raised the prospect that a personal involvement with the issue might preclude Justice Kennedy from ever hearing a case presenting it, with the result that the current nine justices could never decide the question. Justice Kennedy declined to comment on his recusal.
Long Wait
The court turned down an appeal from an Arizona inmate, Joe C. Smith, who argued that his 30 years on death row made his death sentence “cruel and unusual” and therefore unconstitutional. His sentence was overturned twice on appeal. Only Justice Stephen G. Breyer noted a dissent from the denial of the appeal, Smith v. Arizona, No. 07-5847, observing that execution “at this late date” would certainly be unusual and, after decades on death row, perhaps cruel.