Amicus Curiae Brief — Cuellar v. United States

FILED

S(oTY/|

«\ Oo ! DEC 14 2007

2 x “Ps No. 06-1456 SUPREME COURT ES

IN THE

Supreme Court of the Anited States

HUMBERTO FIDEL REGALADO CUELLAR,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

< Respondent.

On Writ of Certiorari

to the United States Court of Appeals for the Fifth Circuit

AMICUS CURIAE BRIEF OF NATIONAL

ASSOCIATION OF CRIMINAL DEFENSE

LAWYERS IN SUPPORT OF PETITIONER

JEFFREY T. GREEN CralIG D. SINGER

SIDLEY AUSTIN LLP (Counsel of Record)

1501 K Street, NW JOHN E. CLABBY

Washington, DC 20005 CHRISTOPHER R. HART

(202) 736-8000 Davip A. TAYLOR

WILLIAMS & CONNOLLY LLP

725 Twelfth Street, NW

Washington, DC 20005

(202) 434-5000

Attorneys for Amicus Curiae

National Association of Criminal Defense Lawyers.

Wiison-EPes PRINTING Co., Inc. — (202) 789-0096 — WASHINGTON, D.C. 20002

aa?

QUESTION PRESENTED

Whether merely hiding funds with no design

to create the appearance of legitimate wealth is

sufficient to support a conviction for money

laundering under 18 § U.S.C. § 1956(a)(2).

QUESTION PRESENTED

ii

TABLE OF CONTENTS ©

SESS EHEE HH HHH HEHEHE

IIE vcictenicveccnvvenivensrevccssmenseseesvenesnenese ii

INTEREST OF AMICUS CURIAE...............cccccccccssesesees 1

IED erscsevientnerensennvenvenssewseemntenninmnenestuowuneennne 2

Il.

THE FIFTH CIRCUITS

INTERPRETATION OF “CONCEAL OR

DISGUISE” EXPANDS 18 U.S.C. § 1956

BEYOND CONGRESS'S INTENT AND

FOSTERS UNJUST RESULTG................c:cccse0e0 4

A.

“The Money Laundering Statute

Is Subject to Expansive

Interpretations That Invite

Prosecutorial Over-Reliance.................... 4

Many Courts Consistently Have

Expanded Specific Terms of 18

U.S.C. § 1956, Encouraging Broad,

Unintended, and Unfair

Applications of the Statute...................... 6

Expansive Interpretations of

§ 1956 Have Significant Negative

Ramifications for the Criminal

ee iecniircimtassemmeneees 13

MANY DEFENDAN’’S WHO SUFFER

OVERBROAD APPLICATION OF

§ 1956 WOULD BE SUBJECT TO

PROSECUTION UNDER OTHER

CRIMINAL STATUTES IN ANY

____,_ SEES Neer 16

CONCLUSION

iv

TABLE OF AUTHORITIES

FEDERAL CASES

Blakely v. Washington, 542 U.S. 296 (2004)............ 17

Santos v. United States, 461 F.3d 886

ETAT eee 10

United States v. Akintobi, 159 F.3d 401

i a i cerca eermrereresnnnns 10

United States v. Cuellar, 478 F.3d 282

inane ceinerennencnegeas 15,17

United States v. Dimeck, 24 F.3d 1239

Tae 9

United States v. Elso, 422 F.3d 1305

ee 7

United States v. Epstein, 426 F.3d 431

cc 11

United States v. Estacio, 64 F.3d 477

NT 10

United States v. Flores, 454 F.3d 149

re 11

United States v. Grasso, 381 F.3d 160

i errant 10

United States v. Haun, 90 F.3d 1096

nis a errteneranenenansseunnnes i]

United States v. Hurtado, 38 F. App’x. 661

EERE. AE ERE SO Te 7

United States v. Iacaboni, 363 F.3d 1

ETE SUE IT ea a 10

United States v. Leslie, 103 F.3d 1093

SE ee ee OC Ee 12

United States v. Lopez, 514 U.S. 549 (1995)............ 12

United States v. Ness, 466 F.3d 79

FEST a anne ae 7

United States v. Posters ‘N’ Things, Ltd., 969 F.2d

elaine 8

United States v. Reed, 77 F.3d 139

EERE SPE ar nee renee OP 8

United States v. Sayakhom, 186 F.3d 928

ESTES ee 11

United States. v. Shepard, 396 F.3d 1116

RIT 8

United States v. Skinner, 946 F.2d 176

EE ee 12

United States v. Sutera, 933 F.2d 641

I a 8

United States v. Valuck, 286 F.3d 221

STR SA TES 12

United States v. Wydermyer, 51 F.3d 319

i. 9 8,9

DOCKETED CASES —

United States v. Santos, No. 06-1005 (cert. granted

Age. BB, BODT) .22<0.cercceccescsccccccccscsccccccssessees 10, 11

FEDERAL STATUTES

BB U.B.C.. 6 BBG .nnccccceccccesccccescsccccesecsosscossessossess passim

Lit. 8 > , passim

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ll -) 17

31 J) A) 17

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OT Ed: 17

RE 14, 17

U.S.S.G. § 2S1.1(DM2NMB)...........ecececeereeeeeeeeeeeseneneeneees 15

vii

MISCELLANEOUS

2007 National Money Laundering Strategy, available

at http://www.treas.gov/press/releases/

docs/nmls.pdf (last visited

Be a acrieiiiiaiiaiiciiicinicienncitttnsiiasbondaiinasis 14

Adam K. Weinstein, Prosecuting Attorneys for Money

Laundering: A New and Questionable. Weapon

in the War on Crime, 51 Law & Contemp.

Probs. 369 (Winter 1988) ...............:cccccccsseeeeeees 4

Ellen S. Podgor, Book Review, Money Laundering

and Legal Globalization: Where Does the

United States Stand on This Issue?, 5 Wash.

U. Global Stud. L. Rev. 151 (2006) .................. 6

Eric. J. Gouvin, Are There Any Checks and Balances

on the Government’s Power to Check Our

Balances? The Fate of Financial Privacy in the

War on Terrorism, 14 Temp. Pol. & Civ. Rts.

AERA CR Se mages ee 15

John K. Villa, Banking Crimes (2001) ................. 9,14

Larry D. Thompson & Elizabeth Barry Johnson,

Money Laundering: Business Beware, 44 Ala.

ERRORS Ea ran 6

Mariano-F lorentino Cuellar, Criminal Law: The

Tenuous Relationship Between the Fight

Against Money Laundering and the Disruption

of Criminal Finance, 93 J. Crim. L. &

Criminology 311 (2003) ..............cccccccc00e. passim

Viii

Mary McNamara, Edward W. Swanson, & Alexis

Haller, Money Laundering: How Prosecutors

Clean up Under 18 U.S.C. Sections 1956 and

1957, 26 Forum 61 (1999), available at

http://www.smhlegal.com/articles/

money%20laund.pdf (last visited Dec. 13,

NACDL Money Laundering Task Force, Proposals to

Reform the Federal Money Laundering

Statutes (Aug. 1, 2001), available at

http://www.nacdl.org/public.nsf/legislation/

CI_01_018?o0pendocument (last visited Dec.

is at eictennninitnntniaatibislindenieadingiaibespdeimenane: 2

Norman Abrams & Sara Sun Beale, Federal

Criminal Law and Its Enforcement

I lta lc errmiinnsnen 4

Sally Baghdasarian, Note, Gatekeepers: How the

Broad Application of Anti-Money Laundering

Statutes and Strategies May Open an

Attorney’s Gates to Prosecution, 32 Sw. U. L.

BE, Se a aincnticiintninsiipeninmectigecminetemneennes 5

Scott J. Golde & Winston E. Calvert, A Practitioner’s

Guide to the Federal Money Laundering

Statutes, 62 J. Mo. B. 312 (2006) ..............0.00-0- 5

Teresa E. Adams, Notes & Comments, Tacking on

Money Laundering Charges to White Collar

Crimes: What Did Congress Intend, and What

Are the Courts Doing?, 17 Ga. St. U. L. Rev.

TE TON WER or mane Deere 13

ix

Tracy Tucker Mann, Money Laundering: Twenty-

Second Survey of White Collar Crime, 44 Am.

Crim. L. Rev. 769, 777-78 (2007) ............ 11,12

United States Sentencing Guidelines Manual

GERD UEED ccvmsnecsvsassonsonsssorpuansnsennecsvesqsesesseuvessequesuns 14

IN THE

Supreme Court of the Anited States

No. 06-1456

HUMBERTO FIDEL REGALADO CUELLAR,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondent.

On Writ of Certiorari

to the United States Court of Appeals for the Fifth

Circuit

INTEREST OF AMICUS CURIAE!

The National Association of Criminal Defense

Lawyers (“NACDL”) is a non-profit organization

with direct national membership of over 11,500

attorneys, in addition to more than 28,000 affiliate

members from all 50 states. Founded in 1958,

NACDL is the only professional bar association that

1 Pursuant to Supreme Court Rule 37.6, counsel for amicus

states that no counsel for a party authored this brief in whole

or in part, and that no person other than amicus, its members,

or its counsel made a monetary contribution to the preparation

or submission of this brief. Letters of consent to the filing of

this brief have been lodged with the Clerk of the Court

pursuant to Rule 37.3.

2

represents public defenders and private criminal

defense lawyers at the national level. The American

Bar Association recognizes NACDL as an affiliated

organization with full representation in the ABA

House of Delegates. NACDL’s mission is to ensure

justice and due process for the accused; to foster the

integrity, independence, and expertise of the

criminal defense profession; and to promote the

proper and fair administration of criminal justice,

including issues -involving the Bill of Rights.

Consistent with these goals, NACDL has previously

criticized illogical and improper judicial expansions

of the money laundering statute at issue in this case,

18 U.S.C. § 1956.2 Amicus also highlighted the legal

problems and practical consequences of expansive

interpretations of § 1956 in its brief in support of

Respondents in United States v. Santos, No. 06-1005,

for which this Court held oral argument on October

3, 2007.

INTRODUCTION

Amicus agrees with Petitioner that merely

hiding funds with no design to create the appearance

of legitimate wealth is insufficient to support a

money laundering conviction. Amicus submits this

brief to elaborate on the reasons why, in its view, the

expansive interpretation of the “conceal or disguise”

2 See NACDL Money Laundering Task Force, Proposals

to Reform the Federal Money Laundering Statutes

(Aug. 1, 2001), available at

http//www.nacdl.org/public.nsMegislation/CI_01_018?opendocu

ment (last visited Dec. 13, 2007).

3

clause of the principal federal money laundering

statute, 18 U.S.C. § 1956(a), given by some courts of

appeals conflicts with the plain language and

meaning of that statute. Amicus writes principally

to explain how the increased and continued

expansion of the money laundering statute has real

and detrimental effects on the rights of criminal

defendants and on the enforcement of the money

laundering statutes.

The expansive and unwarranted

interpretation adopted by the Fifth Circuit below,

and by the Second, Third, and Eleventh Circuits «a

analogous circumstances, improperly expands the

scope of an already broad statute far beyond its

intended reach. Section 1956 has become a vehicle

for increasing potential sentences substantially in

excess of what otherwise would be permissible for

the underlying conduct, without any showing of the

aggravated societal harm that the money laundering

statute was designed to redress. If this over-

expansive interpretation is allowed to _ stand,

criminal defendants unjustly will face longer

sentences and will be forced to weigh the potential

for such sentences in considering whether to plead

guilty.

These grave concerns regarding the scope of

the money laundering statute militate strongly in

favor of reversal. Amicus respectfully requests that

this Court restore the meaning of “conceal or

disguise” in § 1956 to that which the statutory

language supports and which Congress intended.

4

ARGUMENT

I. THE FIFTH CIRCUIT'S

INTERPRETATION OF “CONCEAL OR

DISGUISE” EXPANDS 18 U.S.C. § 1956

BEYOND CONGRESS’S INTENT AND.

FOSTERS UNJUST RESULTS.

A. The Money Laundering Statute Is

Subject to Expansive

Interpretations That Invite

Prosecutorial Over-Reliance.

The Money Laundering Control Act of 1986

(“MLCA”), codified at 18 U.S.C. §§ 1956-1957, was

the first federal statute to criminalize money

laundering per se. See Adam K. Weinstein, Note,

Prosecuting Attorneys for Money Laundering: A New

and Questionable Weapon in the War on Crime, 51

Law & Contemp. Probs. 369, 372—73 (Winter 1988).

As enacted, the MLCA was and is a powerful tool for

prosecutors. Compared with RICO and various

criminal conspiracy statutes, prosecutors can bring

cases relatively easily under § 1956, and its long list

of predicate offenses facilitates convictions. See,

e.g., Norman Abrams & Sara Sun Beale, Federal

Criminal Law and Its Enforcement 397 (3d ed. 2000).

Although the scope of the MLCA was broad

when enacted, many courts since have interpreted

3 Section 1956(c)(7) provides a lengthy list of offenses that

qualify as “specified unlawful activity,” including the definition

of racketeering found in § 1961(1) (which includes, inter alia,

mail and wire fraud).

5

the statute to capture conduct substantially beyond

traditional money laundering. See Scott J. Golde &

Winston E. Calvert, A Practioner’s Guide to the

Federal Money Laundering Statutes, 62 J. Mo. B.

312, 312 (2006) (“The federal statutes not only cover

the classic money laundering scenario where an

individual takes steps to make illegally earned

assets appear legitimate, they also affect a far

broader range of conduct that many would not

consider ‘laundering’ money.”); Sally Baghdasarian,

Note, Gatekeepers: How the Broad Application of

Anti-Money Laundering Statutes and Strategies May

Open an Attorney’s Gates to Prosecution, 32 Sw. U. L.

Rev. 721, 723 (2003) (“The scope of the MLCA can be

rather broad. In fact, the statute can reach so far as

to impose liability on individuals, such as attorneys,

who were not originally involved in any illegal

activity, but later became involved in post-illegal

activity.” (footnote omitted).

Prosecutors accordingly may seek to “tack on”

money laundering charges where the alleged

“laundering” conduct is incidental to or virtually

indistinguishable from the underlying offense. More

broadly, they may seek to use the money laundering

statutes to punish conduct well beyond those

statutes’ proper realm. See Mariano-Florentino

Cuellar, Criminal Law: The Tenuous Relationship

Between the Fight Against Money Laundering and

the Disruption of Criminal Finance, 93 J. Crim. L. &

Criminology 311, 406 (2003) (“People committing

federal offenses that can be predicates for money

laundering (such as drug trafficking), for example,

can now be charged with money laundering for doing

almost anything in the world with money from

6

specified unlawful activity, because of the watered

down interpretations of the anti-money laundering

statutes.”); see also Ellen S. Podgor, Book Review,

Money Laundering and Legal Globalization: Where

Does the United States Stand on This Issue?, 5 Wash.

U. Global Stud. L. Rev. 151, 152 (2006) (“While being

a leader in fighting money laundering activity, the

U.S. Department of Justice has used new statutes

creatively to expand _ prosecutorial power beyond its

intended purpose.”). So broad is the money

laundering statutes’ potential scope that legitimate

conduct may be threatened. See Larry D. Thompson

& Elizabeth Barry Johnson, Money Laundering:

Business Beware, 44 Ala. L. Rev. 703, 723 (1993)

(“[Ajdditional guidelines are needed to prevent

overzealous prosecutors from misapplying the

statutes and to ensure that corporations are not

deterred from entering into legitimate business

transactions.”).

B. Many Courts Consistently Have

Expanded Specific Terms of 18

U.S.C. § 1956, Encouraging Broad,

Unintended, and Unfair

Applications of the Statute.

As Petitioners brief demonstrates, the

principal federal money laundering statute, 18

U.S.C. § 1956, and in particular its “conceal or

disguise” prong,‘ have been interpreted more broadly

than Congress intended. See Pet’r Br. 28-32.

4 A defendant may be convicted under § 1956(a\1) or (a)(2) if it

is shown, inter alia, that the defendant knew the transaction,

(a)(1), or the international transportation, (a)(2), was “designed

in whole or in part—to conceal or disguise the nature, the

“Conceal or Disguise.” Many courts—

including the Fifth Circuit in the decision below—

have adopted extraordinarily expansive

constructions of the phrase “conceal or disguise,”

interpreting it to encompass the mere hiding of

funds.

For example, the Second Circuit recently

upheld the money laundering conviction of the owner

of an armored-car business for transportation of

cash, without evidence that the cash transportation

was designed to give the appearance of legitimate

wealth. United States v. Ness, 466 F.3d 79, 81 (2d

Cir. 2006), petition for cert. filed, June 1, 2007 (No.

. 06-1604); see also United States v. Elso, 422 F.3d

1305 (11th Cir. 2005) (attorney’s placement of

client’s illicitly-obtained cash into personal briefcase,

which: he attempted to transport by car to his law

office, satisfied concealment prong); United States v.

Hurtado, 38 F. App’x. 661 (2d Cir. 2002) (facts

indicating only that money being transported into

the United States was hidden in luggage bags,

without evidence that the transportation was meant

to make the money appear legitimate, sufficed to

show a violation of § 1956). Some courts also have

found the “conceal” element satisfied when the

defendant has done no more than commingle the

proceeds of lawful and unlawful activity in a single

bank account. See United States v. Posters ‘N’

location, the source, the ownership, or the control of the

proceeds of specified unlawful activity.” See also

§1956(a)(3)B).

8

Things Ltd., 969 F.2d 652, 661 (8th Cir. 1992),

(deposit by “head shop” owner of shop proceeds into

_ business account), affd on other grounds, 511 US.

513 (1994); United States v. Sutera, 933 F.2d 641,

648 (8th Cir. 1991) (deposit of gambling proceeds

into family business account bearing defendant’s

name); see also United States v. Shepard, 396 F.3d

1116, 1121 (10th Cir.) (“[Dlepositing illegal proceeds

into the bank account of a legitimate business may

support the inference of an intent to conceal.”), cert.

denied, 545 U.S. 1110 (2005).

“Financial Transaction.” The breadth with

which some courts have construed the term “conceal”

is illustrative of a larger trend among the federal

courts to interpret provisions in § 1956 in an

expansive fashion. For example, to be convicted

under § 1956(a)(1), a defendant must have conducted

a “financial transaction,” which § 1956(c)(4) defines

as “a transaction which in any way or degree affects

interstate or foreign commerce” involving, inter alia,

“the movement of funds by wire or other means.”

Some courts have construed the phrase “or other

means” to be virtually unlimited. See, e.g., United

States v. Reed, 77 F.3d 139, 143 (6th Cir. 1996)

(delivery of money to courier “involved the

movement of funds by wire or other means”

(alteration and quotation omitted); United States v.

Wydermyer, 51 F.3d 319, 326-27 (2d Cir. 1995)

(“physical transportation of money out of the United

States by hand” is a financial transaction by “other

means”); United States v. Dimeck, 24 F.3d 1239,

1246 (10th Cir. 1994) (noting that physical delivery

of cash is “movement of funds by wire or other

means” (emphasis and quotations omitted).

~=

9

According to one commentator, such interpretations

have “the potential to extend the reach of the money

laundering statute to any movement of property and

greatly expand its scope.” 1 John K. Villa, Banking

Crimes § 8:10 at 8-33 (2007). Another commentator

expressed a similar concern:

The continuing trend toward widening

what is meant by financial transaction

gives prosecutors ever more leeway in

deciding when to use § 1956, because

the occurrence of some kind of

financial transaction is what triggers

liability under the statute. In short,

the pattern is that interpretations

have become more draconian over

time.

Cuellar, supra, at 348.

“Proceeds.” As an additional element of a

money laundering offense, § 1956(a)(1) requires

proof that the defendant knew the property involved

in the financial transaction was the proceeds of

specified unlawful activity. Although the statute

does not define this term, some courts have

interpreted it broadly. See United States v. Haun, 90

F.3d 1096, 1101 (6th Cir. 1996) (defining “[p]roceeds”

as “what is produced by or derived from something

(as a sale, investment, levy, business) by way of total

revenue.” (quotations omitted)). Contrary to the

plain language of the statute, “proceeds” has even

been held to include worthless items. See United

States v. Akintobi, 159 F.3d 401, 403—04 (9th Cir.

1998) (holding that, although the term “may refer to

10

something of value,” it “has the broader meaning of

that which is obtained . . . by any transaction,” and

therefore included checks that “ultimately proved

worthless because the accounts backing them up

were either empty or closed” (quotations omitted));

see also United States v. Estacio, 64 F.3d 477, 480

(9th Cir. 1995), as amended on denial of reh’g (noting

that courts “define the term broadly,” and holding

that “proceeds” included a “fraudulently obtained

line of credit, which results in an artificially inflated

bank balance”).

Some circuits also have interpreted “proceeds”

to include gross receipts of the specified criminal

activity rather than only the net income of that

activity; consequently, they construe the statute

broadly to prohibit reinvestment of gross receipts as

expenses of the criminal enterprise. See United

States v. lacaboni, 363 F.3d 1, 4 (1st Cir.), cert.

denied, 543 U.S. 978 (2004); United States v. Grasso,

381 F.3d 160, 169 (3d Cir. 2004), vacated and rev'd

on other grounds, 544 U.S. 945 (2005), reinstated in

relevant part, Nos. 03-1441 & 03-1442 (May 20,

2005). But see Santos v. United States, 461 F.3d 886,

893-94 (7th Cir. 2006). The Court recently granted

certiorari to resolve the circuit split on this issue in

United States v. Santos, No. 06-1005 (cert. granted

Apr. 23, 2007), which was argued on October 3,

2007.5

5 The oral argument in Santos included the following exchange:

Justice Alito: “Mr. Roberts, isn’t it true that

the problems that are being highlighted are

problems that result from expansive

interpretations of other concepts that are not

11

“Willful Blindness.” Additionally, Circuits

have interpreted § 1956 as allowing for conviction

premised on “willful blindness” to the specified

illegal activity. See United States v. Flores, 454 F.3d

149, 155-56 (3d Cir. 2006) (holding willful blindness

sufficient for conviction); United States v. Epstein,

426 F.3d 431, 440 (1st Cir. 2005) (same). But cf.

United States v. Sayakhom, 186 F.3d 928, 943 n.8

(9th Cir. 1999) (explaining that prosecution must

prove more than the defendant “should have

known”). See generally Tracy Tucker Mann, Money

Laundering: Twenty-Second Survey of White Collar

Crime, 44 Am. Crim. L. Rev. 769, 777-78 (2007)

(collecting cases). This despite the statute’s plain

language requiring actual knowledge of illegality.

E.g., 18 U.S:C. § 1956(a) (““Whoever, knowing that

the property involved in a financial transaction

represents the proceeds of some form of unlawful

activity ....” (emphasis added)); see Mann, supra, at

777 (“Sections 1956 and 1957 require actual

knowledge, which is a more stringent standard than

before us here, expansive interpretation of

promotion, expansive interpretation of

concealment? The Seventh Circuit in the first

appeal in this case interpreted promotion very

broadly. And then, I guess it felt that it had

boxed itself in and that’s what led to this

interpretation of proceeds. But if you

interpret those other concepts more narrowly,

you don’t have the same kind of overlap.” Mr.

Roberts: “I agree with that, Your Honor.”

Transcript of Oral Argument at 7-8, United States v. Santos

(U.S. Oct. 3, 2007) (No. 06-1005).

12

‘should have known’ or ‘reckless disregard.’

However, some courts have weakened this

requirement ... .” (footnote omitted)).

Through such expansive interpretations of

terms that otherwise would appear to limit

application of the statute,* many courts now punish

as “money laundering” conduct that bears virtually

no relation to that concept as it is commonly

understood. See United States v. Skinner, 946 F.2d

176 (2d Cir. 1991) (sale of cocaine sufficient for

conviction under the money laundering statute).

“(T]he fluidity of the judicial understanding of these

concepts means that defenses based on grammar and

logic seem . . . doomed to failure.” Mary McNamara,

Edward W. Swanson, & Alexis Haller, Money

Laundering: How Prosecutors Clean up Under 18

U.S.C. Sections 1956 and 1957, 26 Forum 61 (1999),

available at http://www.smhlegal.com/articles/

money%20laund.pdf (last visited Dec. 13, 2007).

These interpretations raise serious concerns that the

power of prosecutors to bring a defendant’s conduct

within the statute has been unfairly and improperly

expanded. “Distinctions in the details of §§ 1956 and

1957 should not obscure the prevailing pattern in

6 See also United States v. Valuck, 286 F.3d 221, 226 (5th Cir.

2002) (announcing that the Fifth Circuit “subscribes to a broad

interpretation of the word ‘promote’ within the context of

section 1956”); United States v. Leslie, 103 F.3d 1093, 1100 (2d

Cir. 1997) (concluding that United States v. Lopez, 514 U.S. 549

(1995), “did not elevate the government’s burden under the

money laundering statute,” and that “[t}he government need

only prove that the individual subject transaction has, at least,

a de minimis effect on interstate commerce”).

13

the way courts parse the statutes’ abstruse terms:

with just occasional exceptions, over time the

statutes’ interpretation has tended to favor

prosecutors.” Cuellar, supra, at 343.7

Interpreting “conceal or disguise” consistent

with the statutory language and intent would not

solve all of these issues, but it would be a step in the

right direction of restoring the money laundering

statutory scheme to its intended scope.

C. Expansive Interpretations of § 1956

Have Significant Negative

Ramifications for the Criminal

Justice System.

These concerns are not merely abstract. An

overbroad reading of the principal federal money

laundering statute has severe consequences for the

many criminal defendants accused of violating it,

and for the criminal justice system as a whole.®

7 Compounding the problem, the United States Attorneys’

Manual imposes limited obligations on prosecutors to notify the

Department of Justice before pursuing money laundering

charges, “in sharp contrast to even the broadly interpreted and

applied RICO statutes which require authorization prior to

prosecution under any circumstances.” Teresa E. Adams,

Notes & Comments, 7 1cking on Money Laundering Charges to

White Collar Crimes: What Did Congress Intend, and What Are

the Courts Doing?, 17 Ga. St. U. L. Rev. 531, 569 (2000) (citing

U.S. Attorneys’ Manual §%§ 9-105.310-.330, 9-110.101).

8 In the most recent year for which statistics are available,

nearly one thousand defendants were convicted under § 1956—

62% of all defendants convicted of money-laundering related

crimes in the federal system. See 2007 National Money

Laundering Strategy 94 tbl. 16 (App. B), available at

14

Section 1956 comes with harsh penalties: a

statutory maximum of up to twenty years’

imprisonment and a fine of either $500,000 or twice

the value of the property involved in the transaction,

whichever is greater. Additionally, although the

Sentencing Guidelines were amended in 2001 in an

effort to “tie[ ] offense levels for money laundering

more closely to the underlying conduct,” U.S.

Sentencing Guidelines Manual app. C, amend. 634,

reason for amend., Vol. II at 781 (2006), even today

money laundering charges can result in a sentence

far greater than that for the predicate offense alone

when the predicate offense is not a drug trafficking

crime. Villa, § 11:30 (Supp. 2006); see also Cuellar,

supra, at 348-49 (2001 Sentencing Guidelines

amendments left sentences for money laundering

“severe enough that prosecutors and investigators

could use money laundering charges as substitutes

for underlying predicate offense charges that might

be more difficult to prove against particular

defendants”).9 Conviction under § 1956

automatically adds two offense levels to the base

level offense applicable to the underlying offense,

http://www.treas.gov/press/releases/docs/nmls.pdf (last visited

Dec. 13, 2007) (citing Dep't of Justice Office of Policy and

Legislation, Crim. Div. (FY 2004)).

° As explained below, even though Petitioner Cuellar’s

predicate conduct was drug-related, had he been convicted

under the bulk money smuggling statute, 31 U.S.C. § 5332

(under which he was not even charged, see United States v.

Cuellar, 478 F.3d 282, 300 n.10 (5th Cir. 2007) (en banc)

(Smith, J., dissenting))}—the charge most directly applicable to

his conduct—he would have faced a statutory maximum one-

fourth that of § 1956.

15

even if no other sentencing enhancements apply.

U.S.S.G. § 2S1.1(b)(2)(B).

In white-collar criminal cases, in particular,

the prospect of higher sentences allows prosecutors

to extract plea bargains and forfeitures that might

not otherwise be forthcoming and that may well not

be in the interest of justice. See Eric. J. Gouvin, Are

There Any Checks and Balances on the Government's

Power to Check Our Balances? The Fate of Financial

Privacy in the War on Terrorism, 14 Temp. Pol. &

Civ. Rts. L. Rev. 517, 534~—35 (2005) (noting, in tne

context of anti-money laundering provisions in the

USA PATRIOT Act, that “prosecutors have used

money laundering violations as a device to leverage

up the criminal consequences for regulated behavior,

creating incentives for the accused to plea bargain”).

Because an indictment with a § 1956 charge risks a

heavier sentence than does an indictment (for the

same conduct) without such a: charge, prosecutors

have a great incentive to use it as a bargaining chip

in pretrial conferences. The mere threat of a money

laundering charge thus can be a powerful weapon in

the prosecutor’s negotiating arsenal.

This vast increase in potential punishment is

entirely unjustifiable if it is not accompanied by

greater culpability on the part of the accused—and,

specifically, by the culpability that Congress meant

to punish when it enacted the statute in the first

place (i.e., “traditional” money laundering). Instead,

prosecutors and courts have interpreted § 1956 to

embrace conduct—as here, “concealment” in an

automobile—that comes nowhere close to presenting

the dangers to society that the money laundering

16

statute was designed to address. Defendants,

including Petitioner here, should not face enhanced

potential sentences for conduct not meaningfully

more blameworthy than the underlying predicate

offenses.

The continued broad and improper application

of § 1956 has real-world consequences for defendants

convicted under it, as well as for defendants

threatened with money laundering charges. The

Fifth Circuit’s expansion of § 1956 in this case, if

affirmed, would further increase prosecutorial power

at the expense of fairness.

ll. MANY DEFENDANTS WHO SUFFER

OVERBROAD APPLICATION OF § 1956

WOULD BE SUBJECT TO

PROSECUTION UNDER OTHER

CRIMINAL STATUTES IN ANY EVENT.

If this Court reversed the Fifth Circuit’s

decision, it would not deprive the government of the

means to punish international financial crimes. On

the contrary, given the numerous other money

laundering statutes, cash reporting statutes, and

anti-smuggling statutes, “there is already no

10 In addition to §§ 1956 and 1957, these include 18 U.S.C. §

1960 (prohibition of illegal money transmitting businesses); 18

U.S.C. § 982 (criminal forfeiture after conviction under, inter

alia, §§ 1956, 1957, 1960); 31 U.S.C. § 5313 (reports on

domestic coin and currency transactions); 31 U.S.C. § 5316

(reports on exporting and importing monetary instruments); 31

U.S.C. § 5317 (search and forfeiture of monetary instruments);

31 U.S.C. § 5324 (structuring transactions to evade reporting

17

shortage of in terrorem tools at prosecutors’

disposal.” Blakely v. Washington, 542 U.S. 296, 311

(2004).

Petitioner’s case is illustrative. As the dissent

in the Fifth Circuit pointed out, and as Petitioner

himself has conceded, Cuellar’s conduct is squarely

captured by the bulk cash smuggling statute, 31

U.S.C. § 5332, because he intended to transport cash

in excess of $10,000 across an international border

without reporting it. See United States v. Cuellar,

478 F.3d 282, 299-300 (5th Cir. 2007) (en banc)

(Smith, J., dissenting) (explaining that the

legislative history of § 5332 demonstrates that

Congress did not intend § 1956 to capture conduct

such as petitioner Cuellar’s). If charged under §

5332, Cuellar would have faced a_ statutory

maximum of five years in prison. Instead, having

been accused and convicted of “money laundering,”

Cuellar was exposed to a twenty-year statutory

maximum sentence under § 1956."

* * *

- Amicus does not dispute the need for an anti-

money laundering strategy, or for an anti-money

laundering statutory scheme. Rather, Amicus

contends that the breadth of § 1956, as interpreted

requirement prohibited); 31 U.S.C. § 5332 (bulk cash smuggling

into or out of the United States).

11 Petitioner was sentenced to a term of seventy-eight months,

with supervised release of three years immediately following.

JA. 4.

18

by the Fifth Circuit, does not conform to the

language of the statute or to Congress’s intent and

leads to unintended and unfair results. This Court

should therefore reverse the judgment below.

CONCLUSION

For the foregoing reasons, amicus curiae

National Association of Criminal Defense Lawyers

supports Petitioner Cuellar’s request that this Court

reverse the judgment of the Fifth Circuit.

19

Respectfully submitted,

JEFFREY T. GREEN CRAIG D. SINGER

SIDLEY AUSTIN LLP (Counsel of Record)

1501 K Street, NW JOHN E. CLABBY

Washington, DC 20005 CHRISTOPHER R. HART

(202) 736-8000 DAVID A. TAYLOR

WILLIAMS & CONNOLLY

LLP

725 Twelfth Street, NW

Washington, DC 20005

(202) 434-5000

Attorneys for Amicus Curiae

National Association of Criminal Defense Lawyers.

December 14, 2007