Wednesday, July 12, 2006

Fifth Circuit Grants En Banc Review in International Money Laundering Case

The Fifth Circuit has granted en banc review in United States v. Cuellar, No. 05-10065 (July 3, 2006 order here; February 22, 2006 panel opinion here).

Cuellar was convicted, at a jury trial, of one count of international money laundering in violation of 18 U.S.C. § 1956(a)(2)(B)(i). The panel held, over a dissent, that the Government failed to prove that the transportation of the money was designed to conceal the source, ownership, etc. of the funds, and that Cuellar knew of that design.

In short, Cuellar was caught driving a car to Mexico with $83,000 in cash concealed in a secret compartment. He testified at trial that he didn't know anything about the cash and "was returning the car to Acuna, Mexico at the behest of a shadowy character he identified only as Mr. Morcia."

The court held that there was sufficient evidence to support a finding beyond a reasonable doubt on the first three elements of international money laundering: 1) Cuellar was attempting to transport the cash to Mexico, 2) the jury could infer that the money constituted proceeds of drug trafficking, and 3) Cuellar's behavior was consistent with courier behavior as explained at trial by an expert ICE agent.

However, the court held that the evidence was insufficient as to the fourth and fifth elements of the offense: that "the transportation of the funds must have been designed (in whole or in part) to conceal or disguise the nature, location, source, or control of the proceeds," and that Cuellar knew of that design.
Concealing the money in the hidden compartment was the means employed to [get the cash to Mexico], but the concealment itself was not the "design" of Cuellar's activity, as the statute requires; the concealment was merely ancillary to Cuellar's design.

Taking hidden cash to Mexico is not money laundering unless some further design to conceal can be proved. 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 for the purpose of taking it to Mexico.
Slip op. at 5. The majority did, however, opine that Cuellar could probably be prosecuted for bulk cash smuggling in violation of 31 U.S.C. § 5332(a) without offending double jeopardy principles.

The dissent would have held that there was sufficient evidence to establish the concealment element "on several levels": 1) Cuellar was involved in a plan whose overall purpose was to "surreptitiously move cash proceeds of drug sales from the United States to Mexico[,]" 2) the plan effectively concealed the kingpin's ownership of the funds, and 3) the cash was literally concealed in the vehicle. According to the dissent, other circuits have found similar facts to constitute sufficient evidence of concealment.


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