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Opinion Recap: Cuellar v. U.S.

The following is by Scott Stewart, a student at Stanford Law School.  His argument preview and argument recap are here on SCOTUSwiki.

The federal money laundering statute, 18 U.S.C. § 1956, prohibits international transportation of the proceeds of unlawful activity.  The statute requires the defendant to know that such transportation is “designed in whole or in part . . . to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity.”  In Cuellar v. United States, No. 06-1456, the Court considered whether that part of the statute requires the government to prove (1) that the defendant attempted to make illegal funds appear legitimate or (2) merely that the defendant hid the money during transportation.  The answer:  neither.  On Monday, June 2, 2008, the Court held that although the government does not need to show that the defendant attempted to make illegal funds appear legitimate, it is required to show that the defendant did more than merely hide the funds during transport.  To sustain a conviction, the government must prove that the defendant knew that a purpose of the transportation was to conceal or disguise a listed attribute of the illicit funds.

In 2004, petitioner Humberto Cuellar was driving toward Mexico when a Texas sheriff’s officer pulled him over for driving erratically.  The officer soon became suspicious that Cuellar may be involved in drug activity:  Cuellar told conflicting stories of his travels, he appeared nervous, he pulled from his pocket a wad of cash that smelled of marijuana, and his car bore features that suggested it had a secret compartment.  Cuellar consented to a search of his car and a narcotics-detection dog alerted to a hidden compartment underneath the floorboard that contained some $81,000 in cash.

Cuellar was convicted under the federal money laundering statute.  On appeal, however, a panel of the Fifth Circuit reversed his conviction and rendered a judgment of acquittal, holding that the government had not shown that Cuellar’s transportation of the funds was itself designed to conceal or disguise a statutorily listed attribute of the funds.  The Fifth Circuit then granted rehearing en banc and reinstated Cuellar’s conviction, believing that it was enough that Cuellar sought to conceal or disguise a listed attribute during transport.

The Supreme Court reversed and held that Cuellar’s conviction could not stand.  Writing for the Court, Justice Clarence Thomas first considered Cuellar’s argument that the statute’s “designed . . . to conceal” element means “designed to create the appearance of legitimate wealth.”  Cuellar had contended that this interpretation reflects the traditional definition of money laundering.  The government had countered that Cuellar’s construction reflects just one of many ways to violate the statute and that the statute aims beyond traditional laundering.  The Court resolved this issue in the government’s favor, explaining that the statutory text reflects an attempt to aim beyond traditional laundering and that the text does not include an “appearance of legitimate wealth” requirement.  Violating the elements of the statute could cause illicit money to appear legitimate (for instance, by concealing the “nature” of the funds), but not necessarily:  “It might be possible for a defendant to conceal or disguise a listed attribute without also creating the appearance of legitimate wealth.”

The Court next considered whether merely hiding money during transportation suffices to sustain a conviction, and agreed with Cuellar that it does not.  The Court focused on the statutory word “design.”  In context, “design” means purpose or plan.  Thus, the purpose or plan of the transportation must be to conceal.  The en banc court of appeals misread “design” to mean structure or arrangement (i.e., the car was structured to keep the money concealed).  Such an interpretation would mean the statute applies whenever someone transports illegally obtained funds in a secretive manner, because he has then structured or arranged the funds in a way to conceal.  The Court found such a construction implausible.  Had Congress intended such a meaning, it could have written “knowing that such transportation conceals or disguises” rather than “knowing that such transportation . . . is designed . . . to conceal or disguise.”  Instead, Congress likely “intended courts to apply the familiar criminal law concepts of purpose and intent [rather] than to focus exclusively on how a defendant ‘structured’ the transportation.”

The Court concluded that the government’s evidence suggested that the concealing aspects of the transaction aided the transportation and had the effect of concealing the funds, but the government failed to prove that the transportation’s purpose was to conceal.  The government offered no evidence that Cuellar “knew about or intended the effect.”  Because the government failed to prove this critical element and instead showed only that Cuellar concealed funds during transport, the conviction could not stand.

Justice Samuel Alito concurred, in an opinion that Chief Justice John Roberts and Justice Anthony Kennedy joined.  Justice Alito joined the Court’s opinion but wrote separately to discuss the deficiency in the government’s case, noting that the government did not point to any evidence from which to infer that Cuellar knew that the transportation’s purpose was to conceal.

Cases: Cuellar v. US