Cuellar v. United States and definition of money laundering

This case deals with how to interpret a federal statute--the federal money-laundering law which was passed in the mid-1980s. The principal issue in the case is whether Cuellar's transportation of $83,000 in concealed cash in his car as he sped for the Mexican border (the money represented the proceeds of drug transactions in the US) constitutes money laundering under the law. The Fifth Circuit three-judge panel that originally decided the case concluded that such activity did not constitute money laundering--because the essence of that crime is that the money be "laundered," i.e., that it be concealed and "transformed" from "dirty" to "clean" money to create the appearance of legitimate wealth. For example, when the money laundering law was passed, an example of the practice was given--where the Gambino crime family collected proceeds from illegal transactions, sent the money to a Swiss bank account and then withdrew the money in cash, now looking "clean," to deposit in a safe deposit box. The Swiss transaction created the appearance of legitimate wealth.

But the Fifth Circuit as a whole court (sitting, as we say, en banc) decided to reconsider the decision of its panel and reversed the panel, holding that the mere concealment of the money in the floor boards of the car constituted money laundering. 478 F3d 282 (2007). Well, in order to understand all this more fully, we need a few facts and then some information on the federal statute(s) that might apply to this case.

Relevant Facts

From the Petitioner's application for cert., we have the following facts summarized:

"In July 2004, Petitioner Humberto Cuellar was travelling south on State Highway 77 in Texas, approximately one hundred miles from the Mexican border. A police officer from the Schleicher County Sheriff's Department stopped Cuellar, apparently because his car was travelling slowly and had swerved onto the shoulder. A translator and a drug-detecting dog were requested. Ultimately, the “officers found a hidden compartment underneath the floorboard containing $83,000 wrapped in duct tape bundles inside blue Walmart sacks and marked with a Sharpie as to the amounts in each bundle," pp. 2-3.

"Cuellar was convicted at trial of international money laundering. He was not charged with bulk cash smuggling. Cuellar was sentenced to 78 months imprisonment and three years supervised release, eighteen months more prison time than the maximum punishment available under the bulk cash smuggling statute," Id.

The Law(s) at Issue

Cuellar was indicted and convicted under the federal money laundering law, 18 USC sec. 1956. This law has separate transaction and transportation paragraphs. Under the former, it is made a crime to engage in a "financial transaction" with the "proceeds of some form of unlawful activity" "knowing that the transaction is designed in whole or in part-- (i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity," 18 USC sec. 1956(a)(1)(B). The transportation money laundering provision, under which Cuellar was convicted, makes it a crime to transport "from a place in the US to or through a place outside the US" "the proceeds of some form of unlawful activity" "knowing that such transportation" is designed in whole or in part--(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity," 18 USC sec. 1956 (a)(2)(B).

The case centered on the meaning of "conceal" in the transportation section of the statute. In the pungent words of the dissent in the 5th Circuit en banc opinion, the court had made transporting to conceal the proceeds of transactions (what the statute requires) identical with concealing to transport the proceeds of transactions (what was actually done). Though the majority found that Cuellar's transportation of the money by itself was, by plain language, and act of concealing which disguised the location and source of the money, the dissent pointed to the actual legislative history of the statute to argue that much more complex financial transactions were in view when Congress passed the money laundering law.

A Diffferent Statute?

It will be a stretch for the Supreme Court to decide that what Cuellar did was money laundering. But perhaps they will expand the meaning of the statute, irrespective of the legislative history. But what might really be going on in this case is that Cuellar was charged under the wrong statute and the Court, like a basketball official that wants to "bail out" a star that has made a bad shot by calling "foul" on a player that may have made contact with him, decided to "stretch" the meaning of the money laundering statute to cover Cuellar's activity.

There is another law, the bulk cash smuggling law, 31 USC sec 5332, which requires the specific intent to evade a currency reporting requirement under 31 USC sec. 5316 plus a knowing act of concealment during transnational transport. The maximum penalty for conviction of violating this statute is five years, 18 months less than Cuellar's sentence. This seems to be the "right law" under which Cuellar should have been prosecuted.

At stake, then, is whether the Court will expand the meaning or reach of the federal money laundering law to include activity that really wasn't thought of as money laundering when the law was passed in the mid-1980s. I actually think that the Court, though it tends to be very anti-criminal, will not affirm the Fifth Circuit. Someone (Justice Kennedy?) will recognize that expanding the statute in the way the 5th Circuit decided to do is not the best way to read laws.

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