Federal Crimes Outline - Professor Bolitho - Campbell Law - Part 7

d. Currency Reporting Offenses

1. Institutional Offenses
   1. There is an affirmative duty to report:
      1. Specified types of transactions
      2. Money crossing international borders in excess of a certain sum
      3. All personal/business transactions, whether a single transaction or a daily aggregate, over $10,000.
   2. Institutional Liability for Failure to Report
      1. 31 U.S.C. § 5322—Failure to report is a felony
      2. §§ 5313 and 5316—Enacts the duty to report
      3. §5322—Criminal Penalty
         1. If the only crime is the willful failure to report, the penaly is a fine up to $250k and/or 5 years max.
         2. If the failure to report is (1) in connection with another crime OR (2) is a pattern of activity involving more than $100,000 over the course of 12 months, the penalty is up to $500,000 and/or 10 years max.
         3. Either of these can be imputed to an institution via respondeat superior
   3. Suspicious Activity Reports (SAR)
      1. These are secret reports filed when an employee of the bank finds a transaction to be particularly suspicious. The report is secret and cannot be used outside of the investigation of criminal activity. It is NOT evidence to be used at trial.
      2. There is an affirmative duty for financial institutions to implement procedures to prevent and detect ML.
2. Offenses by the Individual
   1. Structuring
      1. § 5324—Criminalization of Avoiding Reporting Requirements
         1. Elements
            1. Knowledge of reporting requirements
            2. Action intended to evade those requirements
               1. No need for D to know it is unlawful, only that his purpose was to evade reporting requirements
         2. Can also be guilty if you are using others to make the deposits for you— § 5322(a)(3)
         3. Penalty
            1. Standard = 5 year max
            2. Aggravated case (see § 5322) = 10 year max

e. 18 U.S.C. § 1956 Money Laundering

1. This is a tag-along crime and must be in reference to some specified unlawful activity (SUA) listed in § 1956(c)(7).
2. ML under § 1956 consists of 4 different offenses
   1. They contemplate financial transactions undertaken:
      1. With intent to promote the carrying on of SUA
      2. With the intent to evade taxes
      3. Knowing that the transaction is designed in whole or in part
         1. To conceal or disguise the nature, location, source, ownership, or the control of the proceeds of SUA
         2. To avoid a transaction reporting requirement under State or Federal law
   2. § 1956(h)—Specialized Conspiracy Statute
   3. Elements of § 1956
      1. D conducted a financial transaction
      2. It “involved” property that represented proceeds of the SUA
         1. NO traceability requirement
      3. D knew property involved was the proceeds of some crime
      4. D had the intent to:
         1. Promote the carrying on of SUA
         2. Conceal the true nature of the proceeds
   4. Promote—aids in the execution of crime; even where the thing purchased is illegal
   5. Concealment—See Corchado below
3. The Concealment and Promotion Theories
   1. U.S. v. Corchado (1st Cir.)
      1. D was charged under the concealment theory when the wife made deposits for the criminal husband.
      2. Factors for finding D had “knowledge”
         1. D knew the family had high expenses and low income
         2. Education
         3. Inquiries into husband’s earnings
         4. Family business had no employees
         5. ***Basically, you need to show she knew the money was tainted by some SUA
      3. There are two mens rea
         1. Know the money is tainted
         2. Know the transaction was designed, at least in part, to conceal the true nature of the proceeds
            1. To show concealment, the MUST be some measure of deception. Comingling of funds is good evidence. Gov’t must illustrate an intent to hide the money
            2. Can be circumstantially proven upon showing either (1) she did it upon her own design OR (2) she knew of her husband’s scheme.
         3. Basically, it is not ML to spend a criminal spouse’s money, unless you are part of the scheme
4. Merger Issues
   1. Issue—Whether the ML statute criminalizes the same conduct as the predicate offense. i.e., Whether considering the receipt of funds at a drug deal as ML criminalizes the same conduct as a distribution charge.
   2. Scalia—Voided by Congress—Avoid the issues of whether ML criminalizes ALL transactions of the enterprise or just the act of cleaning it by defining proceeds as profits. ML should focus on the removal of funds.
   3. In 2009, Congress amended the statute to define “proceeds” as all gross receipts of the criminal enterprise
      1. Current Issue—When does money exchanged become proceeds
         1. Two methods for determining it:
            1. When the predicate crime is complete
            2. At the time of the transfer
               1. Halsted (4th Cir.)—each transfer is a separate offense
               2. Simmons (4th Cir.)—However, payments made in a Ponzi scheme were not separate offenses
               3. Basically, ML crime is complete upon the completion of the purpose for each transfer
   4. More on “Proceeds”
      1. The proceeds consist of any money involved in the crime. Not just profits
         1. No requirement to show exactly what SUA the money from
         2. The nature or time of the predicate crime is immaterial
         3. Acquittal of the predicate crime does not preclude ML conviction
         4. For CCE cases, the jury MUST agree upon which SUAs make up the enterprise