U.S. Fifth Circuit Court of Appeals Corrects itself by Holding Overt Act Not Element of Conspiracy to Launder Money, 18 U.S.C. § 1956(h)
Money laundering is a process through which either the source or use of proceeds from illegal financial transactions are concealed. The primary purpose of a money laundering operation is to hide either the origin or destination of money derived from ill-gotten gain. Most money laundering operations are tied to illicit drug trafficking. The Office of National Drug Control Policy estimates that Americans spend $65 billion each year on illicit drugs. Since federal law enforcement agencies seize only $1 billion in drug money each year, according to the U.S. Drug Enforcement Administration, there is a lot of illegal money being laundered at both national and international levels. In 1986 Congress passed the Money Laundering Control Act, which is codified in the United States Code, Title 18, Section 1956, and is the statute most often used by the U.S. Justice Department to prosecute money launderers. In 2007 former Assistant U.S. Attorney Charles Intriago told USA Today that it is easy “to move money in and out [of the country], using U.S. companies, without a trace. This is a glaring problem.”
This “glaring problem” recognized by law enforcement perhaps influenced the U.S. Supreme Court in 2005 to decide Whitfield v. United States which held that federal prosecutors do not have to prove an “overt act” in order to secure a money laundering conspiracy conviction. In a legal sense, an “overt act” is an open, outward action, or step, taken to carry out the intention to commit a crime, from which criminal intent can be implied. The Whitfield decision followed the lead of an earlier Supreme Court decision in United States v. Shabani which held in 1994 that the government did not have to prove an “overt act” as an element in a drug conspiracy case.
The Whitfield decision was particularly significant in this federal circuit because the Fifth Circuit Court of Appeals in United States v. Wilson, which was decided in 2001, held that an “overt act” was an essential element in money laundering conspiracy cases. However, even though Whitfield effectively overruled the Wilson decision, the Fifth Circuit in United States v. Armstrong, which was decided in 2008, and United States v. Bueno, which was decided in 2009, kept saying in dicta that an overt act had to be proven by federal prosecutors to secure a money laundering conspiracy conviction. Apparently this was a mistake.
But the appeals court last month in United States v. Balleza (in a per curiam decision) finally resolved the conflict. In a one sentence paragraph, the court held that “in conformity with Whitfield, we recognize that an overt act is not an element of the offense of conspiracy to launder money.”
The court discussed this correction saying in a footnote: “We take this opportunity to clarify this court’s jurisprudence on whether an overt act in furtherance of the conspiracy is an element of the offense of conspiracy to launder money in violation of 18 U.S.C. § 1956(h). It is not. Overruling United States v. Wilson, 249 F.3d 366, 379 (5th Cir.2001), the Supreme Court held that an overt act is not an element of conspiracy to launder money. Whitfield v. United States, 543 U.S. 209, 214, 125 S.Ct. 687, 160 L.Ed.2d 611 (2005). After Whitfield, this court mistakenly recited in dicta that an overt act is an element of the offense. United States v. Bueno, 585 F.3d 847, 850 (5th Cir.2009); United States v. Armstrong, 550 F.3d 382, 403 (5th Cir.2008). In conformity with Whitfield, we recognize that an overt act is not an element of the offense of conspiracy to launder money.”
Last year in this country there were 1341 money laundering investigations launched by federal law enforcement officials. 1048 of those were recommended to the U.S. Justice Department for prosecution. Federal prosecutors managed to bring criminal charges in 936 of those cases. 753 of those resulted in convictions with 85.9 percent of those convicted being sent to a federal prison for an average 72 months.
Clearly, the decision to relieve the Government of the burden of having to prove an “overt act” in money laundering conspiracy cases has increased the conviction rate in these cases. That will certainly please prosecutors in the Fifth Circuit who must now show only that two or more persons reached an agreement to launder money in violation of Section 1956(h) in order to secure a conviction. They no longer have to prove that one or more of the conspirators took an overt act to further that conspiracy. That’s bad law any way you look at it from a criminal defense attorney’s perspective.
By: Houston Criminal Lawyer John Floyd and Paralegal Billy Sinclair