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Court will define money “laundering”

The Supreme Court agreed on Monday to spell out when an individual engaged in “laundering” of crime proceeds has illegally concealed their real source — in effect, what it means to “launder” money. The issue arises in Cuellar v. U.S. (06-1456). This was the only case granted Monday. Click the following links to read the petition for certiorari, brief in opposition, reply brief, and amicus brief on behalf of the National Association of Criminal Defense Lawyers.

After taking a second look at an appeal by Microsoft Corp., the Court refused to clarify when companies that are partners in a business deal may be sued for triple damages under RICO on the theory that their arrangement is an “enterprise.” There is a conflict in the Circuit Courts on the question, but the Court nevertheless declined to hear it in Microsoft v. Odom (07-138). Chief Justice John G. Roberts, Jr., took no part in the order. The Court had first considered the case at the Oct. 5 Conference.

The Court passed up its first chance to grant another case to test the right of parents of a disabled child to receive reimbursement for private education even though they had not placed their child previously in public schools. The Court denied review in Hyde Park Board of Education v. Frank (06-580), raising the same issue that divided the Court 4-4 on Oct. 10 in New York City Board of Education v. Tom F. (06-637). Justice Anthony M. Kennedy, who did not participate in the action on the Tom F. case, also recused in the Hyde Park case, the Court’s order of denial noted.  A 4-4 split upholds a lower court ruling, but does not set a precedent on the legal question at stake.

Among other cases denied Monday, the Court declined to hear an appeal by the city of Modesto, Calif., which sought to test the constitutionality of a state law that bans elections by the at-large, rather than single-seat, method in order to counter racial bloc voting. The case was Modesto v. Sanchez (07-88). It was a facial challenge that failed in state courts. The city is free to mount an as-applied challenge.

The Court refused, for at least the fifth time in the past 12 years, to consider whether it is unconstitutional for a individual facing a death sentence to have to remain on Death Row for a long period of time.  The Court declined to hear the case of Smith v. Arizona (07-5847), raising this issue: “Whether the standards of decency have evolved to the point that the execution of a person after confinement on death row for over three decades violates the Eighth Amendment’s prohibition against cruel and unusual punishment?”  Justice Stephen G. Breyer, who has voted repeatedly to consider that issue (as has Justice John Paul Stevens), dissented from the denial, and filed a one-page opinion briefly outlined views he had expressed previously.  Justice Stevens did not note his vote this time. Several times in the past, Justice Clarence Thomas has written opinions arguing that there is no constitutional problem in such prolonged waits for execution. He did not write on Monday.

In the newly granted Cuellar case, on money laundering, here is the question raised: “Whether merely hiding funds with no design to create the appearance of legitimate wealth is sufficient to support a money laundering conviction?”  Relying on dictionary definitions and legal argument, the petition contends that “as a matter of plain English, to ‘launder’ money ‘is to disguise illegally-obtained money by making it appear legitimate’ ” — in other words, to make “dirty money” look “clean.”

Under the principal federal money laundering law, criminalizing both transactions in or transportation of crime proceeds, it is a violation if the accused individual knows that either activity was “designed in whole or in part….to conceal or disguise” the nature, location, source, ownership or control of those proceeds.

The new case involves Humberto Fidel Regalado Cuellar, who was convicted of international money laundering and was sentenced to 78 months in prison.  A divided panel of the Fifth Circuit Court overturned his conviction, but that Court granted en banc review and upheld the conviction.

The case arose in July 2004, when Cuellar was driving toward Mexico, when his car was stopped by a deputy sheriff near Eldorado, Texas. The officer suspected the driver had been drinking. After the car was stopped, and another officer summoned to converse with Cuellar in Spanish, officers noted a bulge in his pocket, and found a roll of $10 and $20 bills; the officers thought they smelled of marijuana. A drug-sniffing dog then alerted to the scent of the currency and to a floorboard in the rear of the car. Inside a compartment there, officers found $83,000 in cash wrapped in duct-taped bundles.  He was charged with and convicted of the concealment prong of the international money-laundering law.

The case probably will be scheduled for argument in February or March.

Cases: Cuellar v. US