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Money Laundering: US Supreme Court Skeptical of Government's Broad Interpretation

Submitted by Phillip Smith on (Issue #525)
Consequences of Prohibition
Politics & Advocacy

In oral arguments Monday, the US Supreme Court displayed considerable skepticism about the Justice Department's broad interpretation of federal money laundering laws. The arguments came in Cuellar v. US, in which Mexican national Humberto Cuellar was convicted of money laundering for concealing some $83,000 under the floorboards of his car as he headed for Mexico.

Cuellar was stopped on a Texas highway about a hundred miles north of the border for driving too slowly and veering onto the shoulder. Officers smelled marijuana on a roll of bills in his pocket, then sought and received Cuellar's permission to search his vehicle. During the search, they found the cash hidden away.

Cuellar was subsequently convicted of money laundering, but appealed, arguing that the simple act of concealing money did not constitute money laundering under the 1986 federal money laundering law. Under that law, it is a crime to take the profits from "some form of unlawful activity" out of the country while hiding or disguising its nature, location, source, ownership, or control. The question the court must decide is whether merely hiding the money is sufficient to support a money laundering conviction.

While the Justice Department argued that concealing money as part of a plan to illegally take it out of the country indeed constitutes money laundering under the 1986 law, several justices suggested that it was simply going too far.

"I don't know why they call this statute 'Laundering of Monetary Instruments,'" Justice Stephen Breyer commented, wondering aloud if it would make it a crime to walk across the border with a few dollars hidden in a shoe. "Why didn't they call it 'shoe hiding'?"

"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," noted Justice Ruth Bader Ginsberg.

"No matter how you see it, this was precisely the conduct that Congress was getting at," assistant solicitor general Lisha Schertler told the court.

But Cuellar's attorney, Jerry Beard, told the court it should interpret the law to mean something more than merely hiding cash. "The statute does not criminalize concealing money's existence," Beard said. Instead, he argued, it requires that someone must seek to minimize the criminal nature of the funds. While Cuellar "may have in fact concealed money itself, he did not conceal the 'nature, source, location, ownership or control' of the unlawful proceeds," Beard argued.

Chief Justice John Roberts Jr. challenged Beard on whether Cuellar was attempting to conceal the money, but later seemed to be equally skeptical of the government's position. When Schertler suggested that putting money in a suitcase in the trunk of car could be evidence of a "design to conceal," Roberts retorted: "When I use a suitcase, I'm using it to carry my clothes, not to conceal them."

Justice John Paul Stevens added that the government's broad position seemed to make the whole concept of money laundering irrelevant. "Is this just a total wild goose chase?" he asked.

The federal money laundering statute, most often used against presumed drug traffickers, carries a maximum 20 year sentence and fines of up to $500,000. Nearly a thousand people were convicted under the statute in 2006. But if Monday's oral arguments are any guide, the Justice Department may soon have to actually prove money laundering to gain a money laundering conviction, not just that someone was hiding cash.

Permission to Reprint: This content is licensed under a modified Creative Commons Attribution license. Content of a purely educational nature in Drug War Chronicle appear courtesy of DRCNet Foundation, unless otherwise noted.


Anonymous (not verified)

Similarly to the alcohol prohibition era which created constitutionally questionable gun restrictions, drug prohibition has created other abuses to constitutional rights of property and privacy. One can't help wonder if these Orwelian like measures are intentional or just a product of the impossible enforcement of unreasonable statutes.

Fri, 02/29/2008 - 2:41pm Permalink
Anonymous (not verified)

Then why hasn't Rep. William Jefferson been indicted some 2 years later for the $90,000 of marked FBI money he had wrapped up in his feezer? He has been re-elected but not charged with anything. Once again laws are only for the rest of us not those that make them.

At first I think they were a product of the impossible enforcement but as time moved on and people didn't seem to care it has now become intentional because they know anything they say trumps and logic if its for the children and our safety.

Fri, 02/29/2008 - 2:51pm Permalink
Anonymous (not verified)

Now we see where these justices are getting their extra income! How dare they take up for money launderers and still uphold the conviction of American people who buy such people's illegal products!!!

Fri, 02/29/2008 - 4:46pm Permalink
mlang52 (not verified)

In reply to by Anonymous (not verified)

I don't understand the comment, completely. The point is that many people have had their money taken when they were not proven to be involved with drugs or drug money at all. Assuming guilt because a person does not trust banks and hides his money in a car (stupid but not out of the question) is exactly why the laws are being questioned! But I guess some of us can tell who is guilty and who is not by the way they spell their last name! (hispanic?) Is that not bigoted?

Sat, 03/01/2008 - 4:52pm Permalink
Anonymous (not verified)

When I go to Mexico I hide my cash too, even if it's just a few $20's. Mexico isn't the richest country, any American knows that a dollar is a lot there. I wouldn't trust that putting your money in a suitcase (or any other case) and driving through Mexico would guarantee it's safety. I'd hide $83,000 in a car too.

Mon, 03/03/2008 - 9:01pm Permalink
Anonymous (not verified)

Why would Texas assume Mr.Cuellar had no intention of stopping at the border? The man was approx. 100 miles NORTH of the border. Still in Texas, correct??? Anytime you enter OR leave the United States, you go through Customs. I wasn't aware Texas state, county, or city cops are Federal Customs Agents. So, does that mean I would have to Declare anything over 9,999.99 U.S. dollars ( in my possession ) 100 miles BEFORE I get to the border? If that's the more duty-free store for me. Apparently, as long as I tell a Texas cop, I won't have to stop again. maybe

Sun, 06/01/2008 - 7:40pm Permalink

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