The ‘crime’ of money laundering

The Supreme Court on Monday ruled against the government in two related cases, chiding police and prosecutors for going too far in their use of money laundering charges to "load up" their bill of particulars against drug traffickers and regulatory criminals.

Stymied in their efforts to stop the drug trade, Congress in 1986 enacted laws that enabled federal police to seize a suspect's homes, cars, boats and cash before he's been convicted of anything, under the newly thought-up prohibition against "money laundering."

Making it a crime to transport money with the intent to conceal the source, ownership or control of the funds, this is a dangerous law even when used as intended. But no one familiar with federal law enforcement will be surprised to learn the G-men now use the "money laundering" statute in cases never contemplated by that law's authors.

In Monday's first, unanimous, decision, the court held a money laundering case cannot be proved merely by showing funds were concealed while being transported.

Officers stopped Humberto Cuellar in Schleicher County, Texas, about a hundred miles from Mexico. Authorities subsequently found more than $80,000 in cash in a secret compartment in the car. Cuellar was convicted of international money laundering and sentenced to 61/2 years in prison.

The justices did not go as far as Cuellar's lawyers had urged. Writing for the unanimous court, Justice Clarence Thomas said the government is not required to prove a defendant attempted to create the appearance that laundered money was legitimate. But the court did throw out the conviction, saying prosecutors must show the purpose of transporting funds in a money laundering case was to conceal its ownership, source or control -- just finding a wad of cash hidden, out of sight, does not prove a crime.

In the separate 5-4 decision, the court upheld an appeal in the case of Efrain Santos, convicted of running an illegal lottery, or bolita, in northwest Indiana. Santos was sentenced to five years in prison on the gambling offense -- and a whopping additional 171/2 years based on the government's contention that he was "laundering" his illegal proceeds by using them to compensate his employees and pay off the winning bettors.

The court ruled Monday that "money laundering" can be asserted only in relation to profits of an illegal operation, not gross receipts.

The justices are right to rein this stuff in. Money laundering carries a maximum penalty of 20 years in prison; prosecutors now use it to enhance their list of charges so regularly that they ended up bringing "money laundering" cases against 1,347 people in 2006.

Are we to believe they laid hands on 1,300 major drug kingpins in one year? Were they all big-time "Godfathers" such as Efrain Santos and Humberto Cuellar? Come on.

"The rulings significantly raise the bar for prosecutors to prove money laundering," comments Jeffrey Green, who represents the National Association of Criminal Defense Lawyers.

Good. Larding up the list of charges is often designed to make prospective prison sentences look so onerous that even innocent defendants may be tempted to "take the deal" in hopes of getting out before their small children are grown.

It's not a crime to "possess a lot of cash while Hispanic," nor is it "money-laundering" for a common thief to use a stolen dollar to buy a Pepsi. Presumably, Efrain Santos will still do his time on the gambling offense. Fine. But let's stick to jailing people for their actual crimes.