En Banc Fireworks Over Concealment Element of Int'l Money Laundering, Lack of Sanctions for Gov't Discovery Violation

United States v. Cuellar, No. 05-10065 (5th Cir. Feb. 2, 2007) (en banc)

It's not uncommon to see courts criticized for what appears to be result-oriented decision-making, especially when it comes to the war on drugs. Rarely, however, do you see such criticism coming from judges themselves, and in terms as strong as those found in the introductory paragraphs of the dissent in this case:

This is a case of a prosecution run amok. Mike Nifong, another prosecutor apparently familiar with the “win at any cost” mantra, most surely would approve. The government set out to “get” Humberto Cuellar for something, and why not? He is apparently a “bad dude,” an accessory to what likely was a serious drug-running operation; moreover, this is, after all, the “war on drugs.” But instead of charging under a statute of which Cuellar (by his attorney’s admission) is guilty, the government used the wrong law, and the majority now has blessed the government’s missteps with a holding that makes “money laundering” out of virtually any transfer of illicit proceeds across an international border. A person steals petty cash, hides it in his shoe, and is caught crossing into Mexico: “money laundering,” according to the en banc majority’s rendering of this appeal.

The government is guilty of at least three excesses in this case. First, it stumbled by charging the wrong statute, when it easily could have used the correct one. Then, in a transparent effort to cover for its blunder, it has succeeded in making a mockery of the concept of money laundering in this court. And finally, it blatantly deprived Cuellar of his rights at trial by its knowing failure to provide adequate disclosure of the expected testimony of a key, expert witness.

Today’s zealous en banc majority aids and abets the government’s excesses. It exhibits an impressive determination to aid the “war on drugs” and the government’s boundless quest to incarcerate a foot soldier who apparently is on the wrong side of that war. Unfortunately, to achieve its end the majority ignores common sense, context, and accepted principles of statutory interpretation to reach an ultimately absurd and embarrassing result. Because I decline to rewrite the law judicially, I respectfully dissent.

Slip op. at 31-32. Let's take a look at what prompted such strong words, shall we?

Cuellar was apprehended attempting to transport $83,000 in cash to Mexico. The cash, which smelled of marijuana, was concealed inside a hidden compartment in the Volkswagen Beetle that he was driving. He was charged and convicted of international money laundering, in violation of 18 U.S.C. § 1956(a)(2)(B)(i). Cuellar appealed, arguing that the evidence was insufficient to prove two elements of the offense beyond a reasonable doubt: 1) that the transporation of the funds was designed in whole or in part to conceal or disguise the nature, location, source, control, or ownership of the proceeds, and 2) that Cuellar knew of that design.

As discussed in more detail here, a divided panel reversed Cuellar's conviction. Judge Smith, joined by Judge Dennis, held that the Government presented insufficient evidence on the concealment element, which requires transporting the money in order to conceal it's source, nature, etc., not merely concealing it in order to transport it: "The statute would prohibit taking drug money to Mexico for the purpose of concealing the fact that it is drug money. The statute does not outlaw concealing drug money from the police for the purpose of taking it to Mexico." Judge Davis dissented, arguing that physically concealing cash is enough, and that other circuits have affirmed convictions based on similar conduct.

The court granted rehearing en banc, and, with Judge Davis writing for the majority, reversed the panel's decision. The court essentially held that because Cuellar concealed the cash as part of transporting it, there was sufficient evidence to establish the concealment element of the offense. It rejected the idea that the money laundering statute only reaches "concealment that is accomplished in a certain way[,]" concluding that the meaning of the term "conceal" was plain. But the court also confusingly suggested (by way of distinguishing a case from another circuit) that something more than mere concealment is necessary. And according to the majority, its construction of the statute is consistent with that of the other circuits to have addressed the question.

The court also reached a second issue that the panel did not address, involving two separate aspects of expert testimony presented by the Government at trial. Shortly after arraignment, Cuellar filed a motion requesting expert witness disclosure from the Government under Fed. R. Crim. P. 16(a)(1)(G). The district court granted the motion, ordering disclosure by a certain date. Over three weeks after the deadline, and just two weeks before trial, the Government finally gave Cuellar notice of its intent to present an agent as an expert on methods of smuggling drugs and drug proceeds. The bare bones disclosure did not comply with the requirements of Rule 16(a)(1)(G). (Check out pages 56-57 to see exactly what the Government disclosed.) Nevertheless, the district court refused to exclude the agent's testimony or otherwise sanction the Government for its discovery violation. Compounding the error, the agent testified about drug courier profiles at trial and expressed an opinion on Cuellar's mental state in violation of Fed. R. Evid. 704(b):

Q: Does a drug smuggler give his marijuana or his money to be transported to someone who doesn’t know what they are transporting?

A: Not in my experience. The people who are driving money or who are driving dope know that they are transporting either dope or money, something of value. They may not know that - - whether they are marijuana or cocaine. They may not know how much money they have, but they know they are transporting it.

Slip op. at 27.

The en banc majority first held that although the Government's disclosure was plainly untimely and inadequate, the district court did not abuse its discretion in declining to impose discovery sanctions. It pointed out that testimony pertaining to smuggling methods "has become almost routine in drug cases," and that there was no prejudice to Cuellar's substantial rights because such testimony is not all that complex and Cuellar's attorney was able to effectively cross-examine the agent. Second, on review for plain error, the court held that the district court's admission of courier profile testimony was error and that the error was plain, but that the error did not affect Cuellar's substantial rights because of the ample evidence of Cuellar's guilty knowledge.

Judge Smith, joined by Judge DeMoss, dissented vigorously, landing solid blows against every aspect of the majority's decision. (Judge Dennis joined all but the introductory paragraphs quoted at the beginning of this post, which is strange considering the rest of the dissent reads the same way.)

As to the statutory construction issue, the dissent argues that the term "conceal" must be construed in light of the purpose of the money laundering statute, which is to attack the practice of disguising illegitimate funds to make them appear to come from a legitimate source. Accordingly, the concealment element of § 1956 should only reach "transporting money to conceal it" rather than "concealing money to transport it." The dissent cites several canons of construction in support of that interpretation, as well as the same case law relied upon by the majority:

• The Statute's Title: A term must be read in light of the title of the statute in which it is found, which in this case is "laundering of money instruments." Money laundering is commonly understood to mean the disguising of illegitimate money to make it appear legitimate, not simply the movement of illicit funds.
• Legislative History: The legislative history of § 1956 overwhelmingly reflects the common understanding of "money laundering" as the cleansing of dirty money. Additionally, Congress passed a statute criminalizing bulk cash smuggling (31 U.S.C. § 5332) because it didn't believe § 1956 covered the mere smuggling of illicit cash across the border.
• Rule of Lenity: When a term is susceptible of multiple meanings, as "conceal" is here, the rule of lenity requires the court to adopt the more restrictive meaning.
• Canon Against Absurdities: The dissent propounds a couple of hypotheticals illustrating the aburd results compelled by the majority's holding. (For example, under the majority's interpretation, Cuellar would not have been guilty of money laundering if he'd simply piled the cash in plain view on the front seat of the car, even though he would still have been trying to transport drug proceeds to Mexico.) The dissent also faults the majority for claiming that there is some difference between concealment and mere concealment, a distinction that the majority doesn't really explain.
• Case Law: According to the dissent, none of the case law relied upon by the majority actually supports the majority's position. In fact, the majority creates a circuit split on the proper interpretation of "conceal."
  

The dissent also disagrees with the majority's resolution of the expert testimony issue, for obvious reasons:

[T]he government completely flouted the discovery rules to Cuellar’s detriment but offered no explanation for its action. The majority finds that, because Cuellar elicited self-evident testimony on cross-examination, he had sufficient time to prepare, so no sanction is necessary. This holding creates perverse incentives: incentives for the government to ignore well-established discovery rules because it need not fear sanctions, and incentives for the defendant to hold back from mounting an effective defense so he might have a chance to have the government sanctioned on appeal.

Slip op. at 60.

The dissent concludes by "call[ing] upon the Attorney General to confess error in this case of prosecutorial excess . . . ."

It'll be interesting to see what happens with the inevitable cert petition in this case. How will the Solicitor General respond? And will the Supreme Court agree to consider the case?