United States v Cessa: money laundering conspiracy
15 Aug 2017

Stefan Cassella of Asset Forfeiture Law, LLC summarises a recent case that dealt with the law relating to money laundering conspiracy; namely, the stipulation that a conviction for money laundering conspiracy under § 1956(h) requires proof that the defendant intended to join the conspiracy and shared in its objectives.

If the jury believes that the defendant participated in the laundering of drug money out of fear of the drug organization, and not because he shared its objectives, it should find that he did not join the conspiracy and therefore should be acquitted.

Accordingly, evidence that the defendant acted out of fear is exculpatory and should be produced as Brady material.

The commingling of legitimate funds with drug money is evidence of an intent to conceal or disguise and the court may so instruct the jury, as long as it makes clear that the inference is permissive and not mandatory.

 

[United States v. Cessa, ___ F.3d ___, 2017 WL 2742277 (5th Cir. Jun. 9, 2017).]

 

Defendant, a Mexican businessman, was convicted by a jury of conspiring to launder millions of dollars in drug proceeds for Los Zetas, a Mexican drug cartel, by investing the Zetas’ money in racehorses. He appealed his conviction on several grounds.

First, he objected that the Government committed a Brady violation when it failed to turn over FBI 302s (notes of witness interviews) that were exculpatory. The Government argued, and the district court found, that the 302s were not exculpatory, but the panel did not agree.

Defendant’s defense was that he participated in the racehorse scheme out of fear of the Zetas and not because he wanted the money laundering scheme to succeed. If believed by the jury, the court said, that would be a valid defense: a person who participates in a money laundering scheme out of fear, and not because he shares the object of the conspiracy, does not intend to join the conspiracy, and thus cannot be found guilty under 18 U.S.C. § 1956(h).

The 302s that the Government did not produce contained witness statements supporting Defendant’s assertion that he was in fear of the Zetas. Accordingly, because they supported Defendant’s defense, they constituted exculpatory evidence. The panel remanded the case to the district court for further fact-finding, however, before deciding whether the failure to produce the statements required the reversal of Defendant’s conviction.

The panel then considered Defendant’s second argument: that the district court erred in instructing the jury that Defendant’s commingling of legitimate funds with the Zetas’ drug money was evidence of an intent to conceal or disguise the criminal proceeds.

“Evidence that the defendant commingled illegal proceeds with legitimate business funds is sufficient to support a conviction [for money laundering],” the court said. It is important, however, that the jury instruction on that point make clear that “the inference is permissive and not mandatory.” Here, the district court did not violate that rule: it instructed the jury that if it found that Defendant commingled funds, it may find that he did so “with the intent to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds.” Because there was evidence in the record that Defendant did engage in such commingling, the jury instruction was proper.

Moreover, the court held that the prosecutor, in her closing argument, did not convert the permissible inference to a mandatory one when, in summarizing the evidence of commingling, said, “I submit to you that” the commingling constituted money laundering. The phrase “I submit to you” is proper argument that the permissible inference may be drawn from the evidence, the court said, not an instruction that it must be drawn.

Accordingly, the court remanded the case to the district court on the Brady issues but otherwise rejected all of Defendant’s objections to his conviction.

 

Comment: The Government may use circumstantial evidence to establish that the defendant intended to join a money laundering conspiracy and shared in its objectives. The substantial body of case law on that point is collected in Section XX.D of the Money Laundering Case Outline.

Stefan Cassella, Asset Forfeiture Law, LLC 

www.assetforfeiturelaw.us

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