09 May 2017
Stefan Cassella of Asset Forfeiture Law, LLC discusses a recent Sixth Circuit judgement which establishes that assets can themselves be the proceeds of an underlying “specified unlawful activity” (SUA) and therefore that “proceeds” for purposes of the money laundering statute need not be money.
[United States v. Myers, ___ F.3d ___, 2017 WL 1360775 (6th Cir. Apr. 14, 2017).]
Sixth Circuit * Defendant was a “serial thief of motor homes.” He would obtain the VIN numbers of motor homes, forge certificates of title, steal the motor homes with master keys that he obtained online, and drive the motor homes out of state where he would sell them to unsuspecting dealers.
In three instances, Defendant used this method to steal a motor home in Michigan and then sell it elsewhere (in Pennsylvania and Mississippi). He was charged in Michigan with three substantive violations of 18 U.S.C. § 2312 (interstate transportation of a stolen vehicle) and with conspiracy to commit that offense in violation of 18 U.S.C. § 371. He was also charged with three substantive counts of concealment money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(i) and with conspiracy to commit that offense in violation of Section 1956(h). For each of the money laundering charges, the Government alleged that the money laundering offense was the sale of the stolen motorhome to the out-of-state dealer.
Defendant was convicted of all counts by a jury and appealed.
Defendant’s argument on appeal was that venue for the money laundering and money laundering conspiracy charges was improper in Michigan because he did not conduct the financial transactions that were the bases for the money laundering charges in Michigan.
Section 1956(i)(1)(B) of the money laundering statute deals with precisely this situation. It provides that venue for a substantive money laundering offense lies in the district where the underlying specified unlawful activity (SUA) took place “if the defendant participated in the transfer of the proceeds of the specified unlawful activity from that district to the district where the financial or monetary transaction is conducted.” Here, the proceeds of the SUA were the three stolen motorhomes; accordingly, the court held that when Defendant transported the three vehicles from Michigan where the SUA took place to Pennsylvania and Mississippi where they were sold – i.e., where the financial transactions constituting the money laundering offenses were conducted, he “participated in transferring the proceeds of his theft out of Michigan.” Thus, he was properly prosecuted for the money laundering offense in Michigan.
Defendant conceded that if the motorhomes were the “proceeds” of his offense, then venue was proper in Michigan. He argued, however, that he did not obtain any proceeds of the Section 2312 offense until he sold the vehicles. “Proceeds,” he claimed, can only be obtained from a financial transaction. The court did not agree.
Nothing in the money laundering statute limits “proceeds” to money derived from a financial transaction. To the contrary, Section 1956(c)(9) defines “proceeds” to include “any property derived from . . . some form of unlawful activity.” Thus, under the plain language of the statute, the motorhomes themselves were the proceeds of the theft offense, and their later sale to unsuspecting dealers was a violation of the money laundering statute.
The court also rejected Defendant’s venue challenge to the money laundering conspiracy count. Under Section 1956(i)(2), venue for a money laundering conspiracy lies in the district where venue would lie for the completed offense, or in any other district where an overt act in furtherance of the conspiracy took place. Because, as already discussed, venue for the substantive acts was proper in Michigan, so was venue for the money laundering conspiracy. Moreover, because the commission of the underlying SUA in Michigan was an overt act in furtherance of the conspiracy, venue for the conspiracy was proper in Michigan for that reason as well.
Finally, the panel rejected Defendant’s contention that charging him with both the Section 371 conspiracy to violate Section 2312, and the Section 1956(h) conspiracy to commit money laundering was multiplicitous. Each conspiracy, the court said, requires proof of an element that the other does not: Section 371 requires proof of an overt act, which Section 1956(h) does not; and Section 1956(h) requires proof of an intent to commit money laundering, which Section 371 does not. Therefore, under the Blockberger test, there was no reason the defendant could not be charged and convicted of both conspiracies.
So all of the convictions were affirmed.
Comment: One of the keys to the holding in this case is that the motor homes themselves were the proceeds of the underlying SUA. Thus, the defendant’s later sale of the motor homes to unsuspecting dealers in Pennsylvania and Mississippi could be charged as money laundering offenses.
There are only a few cases holding that “proceeds” for purposes of the money laundering statute need not be money, but the court’s holding on that point is an undeniably correct application of the plain language of Section 1956(c)(9). Other cases involving non-monetary proceeds are collected at Section VIII.A of the Money Laundering Case Outline.
Because the stolen vehicles were themselves SUA proceeds, it followed that the defendant’s transportation of those vehicles to the places where they were sold triggered the venue provision in Section 1956(i)(1)(B), and allowed the Government to prosecute him for the ensuing money laundering offenses in the district where the underlying theft took place.
Section 1956(i)(1)(B) was enacted in the wake of the Supreme Court’s decision in Cabrales v. United States, 524 U.S. 1 (1998), which held that a defendant who conducted financial transactions in Florida and had no role in transporting the SUA proceeds from Missouri to Florida could not be prosecuted in Missouri even though SUA offense was committed there. 524 U.S. at 10. In Cabrales, however, the Court indicated that money laundering “might rank as a continuing offense triable in more than one place, if the launderer acquired the funds in one district and transported them to another.” 524 U.S. at 8.
Congress – or at least the attorney at the Department of Justice who drafted Section 1956(i) – saw that dicta in Cabrales as an endorsement of the “continuing offense” theory and thus as a green light to the enactment of a statute writing that dicta into law. Curiously, the validity of that assumption was not obvious to the panel in this case. After holding that venue would be proper in Michigan for the substantive money laundering offenses under Section 1956(i)(1)(B), the panel split 2-1 on the constitutionality of that statute, with the majority (Merritt and Rogers, JJ.) holding that the dicta in Cabrales was correct, while the dissenting judge (Kethledge, J.) argued that it was not and that therefore Section 1956(i)(1)(B) was unconstitutional.
To my knowledge, the constitutionality of Section 1956(i)(1)(B) has not been challenged in any other case.
Finally, it is worth noting that the panel’s holding on venue for a money laundering conspiracy is very broad. If, as the panel holds, venue for a § 1956(h) conspiracy lies where any overt act occurs, and the SUA is alleged as an overt act in furtherance of the money laundering conspiracy, then venue for a money laundering conspiracy could always lie in the district where the SUA took place.
Stefan Cassella, Asset Forfeiture Law, LLC
You can claim CPD minutes for this content, by signing up to our CPD WalletFREE CPD Wallet