By Jenni Hesterman
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In a landmark decision on Monday, the U.S. Supreme Court overturned 2 money laundering cases, redefining the statute and increasing the burden of proof needed to prosecute the crime.
One of the pivotal cases involved Humberto Cuellar of Acuna, Mexico. On July 14, 2004, Cuellar was driving erratically on State Highway 77, about 100 miles from, and heading toward, the Mexican border. His vehicle had no license plate and he was driving 30 MPH below the speed limit, which caught the attention of law enforcement officers who judiciously initiated the traffic stop. Cuellar was nervous, so officers continued their investigation and discovered a bundle of cash in Cuellar’s pocket that smelled of marijuana.
Inspecting the car, they also noticed drill marks, evidence of gas tank tampering, and mud strategically placed on the car – all possible signs of a secret drug-transportation compartment in the vehicle. Cuellar authorized a search of his vehicle, and drug detection canine subsequently alerted on the trunk of the car, where officers found over $80,000 in cash in a secret compartment under the floorboard. The money was bundled with plastic bags and tape, and animal hair was spread throughout the compartment in a possible attempt to mask the smell of the cash. When asked about the hair, Cuellar stated that he had been transporting goats…in his Volkswagen Beetle. Officers continued to question Cuellar. He was extremely nervous and changed his story several times, even stating that he was supposed to have the car in Mexico by midnight, or his family would be “floating down the river.”
Cuellar was ultimately convicted under the 1986 Federal Money Laundering Control Act of “attempting to transport the proceeds of unlawful activity across the border, knowing that the transportation was designed ‘to conceal or disguise the nature, the location, the source, the ownership, or the control’ of the money.” The United States Court of Appeals for the Fifth Circuit, in New Orleans, upheld the conviction. However, on Monday, the Supreme Court reversed Cuellar’s conviction in a 9-0 vote.
Comments by the Justices shed light on the decision to overturn. “We agree with [Cuellar] that merely hiding funds during transportation is not sufficient to violate the [money laundering] statute, even if substantial efforts have been expended to conceal the money,” Justice Clarence Thomas said. Justice Ruth Bader Ginsburg observed, “On the government’s theory, anyone who transports hidden money to get it out of the country, who drives the car, just the driver, is a money- launderer.” When a government lawyer said that putting money in a suitcase in a car’s trunk might be evidence of a “design to conceal,” Chief Justice John G. Roberts Jr. said, “When I use a suitcase, I’m using it to carry my clothes, not to conceal them.”
Upon closer review, one reason the conviction was overturned related to the fact the government couldn’t prove the money was “the proceeds of some form of unlawful activity” as dictated by current money laundering statute, 18 U.S.C. § 1956(a)(2)(B)(i). Perhaps is time to change this law and broaden the definition of money laundering to capture activities all of those involved in the gathering, storing, moving and using money for illicit means.
Money laundering isn’t just about making dirty money clean–it is also about making clean money dirty. For example, money may be legally collected through charitable giving, and then used by terrorists to buy weapons, or pay for specialized training. The source or the “color” of the money, although of obvious interest in the effort to disrupt a criminal enterprise or terrorist cell, should be no concern when pursuing money laundering charges if storage, transport or use is nefarious in nature. Therefore, under the current law, if the defendant refuses to disclose the source of the funds, this works in his favor. No illegal source=no money laundering charge.
Part of the argument for overturning the conviction was because the government couldn’t establish a purpose for concealment. Even if he was just an innocent man, unknowingly driving a car loaded with cash to the border, why isn’t Cuellar responsible for the contents of his vehicle? If he had a stash of weapons, would he not face charges as a gunrunner? What if it were human cargo in the concealed compartment? It seems that cash changes the argument and adds additional burden of proof on the investigators, since purpose and intent isn’t as crystal clear as it is with other concealed and smuggled items.
The Justices pressed prosecutors to disclose Cuellar’s intentions for the money. Perhaps he was merely going to pay a debt with the money to protect his family, or was just carrying the cash as one of millions who are nonbanked and use forms of remittance to transfer money to relatives in Mexico. Unfortunately, as far as public documents show, no intent was established.
This ruling has far reaching implications and attorneys are no doubt reviewing charges and revamping cases. But the ripples are surely felt all the way down to the front lines. No doubt the case was watched with great interest by the law enforcement officers who correctly sensed trouble and pulled Cuellar over 4 years ago, not knowing if he had a weapon, or was under the influence and would become violent. And not knowing whether they had a petty criminal on their hands…or a courier for a major terrorist organization.
And now it appears we will never know the answer.
Sources:
Supreme Court Transcripts
Court Rules on Money Laundering
Cuellar v. US
About the Author
Jenni Hesterman is a retired Air Force colonel and counterterrorism specialist. She is a senior analyst for The MASY Group, a Global Intelligence and Risk Management firm that supports both the U.S. Government and leading corporations. She is also an adjunct professor at American Military University, teaching courses in homeland security and intelligence studies.
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