Opinion ID: 2513
Heading Depth: 1
Heading Rank: 2

Heading: DISCUSSION a) Money Laundering

Text: In Cuellar, the defendant had been convicted of international money laundering under 18 U.S.C. § 1956(a)(2)(B)(i) after police officers found $81,000 in narcotics proceeds during a search of his car. See id. at 1998. The Fifth Circuit reversed the conviction after concluding that the evidence failed to show that the purpose of the transportation was to conceal or disguise unlawful proceeds and create the appearance of legitimate wealth. See id. at 1998-99. The Fifth Circuit granted rehearing en banc and affirmed the conviction. See id. at 1999. The court rejected Cuellar's argument that the government must prove that he attempted to create the appearance of legitimate wealth. It held rather that Cuellar's extensive efforts to prevent detection of the funds during transportation showed that he sought to conceal or disguise the nature, location, and source, ownership, or control of the funds. See id. On certiorari, the Supreme Court rejected an interpretation of the statute that would require the government to prove that the defendant attempted to create the appearance of legitimate wealth. See id. at 2000. However, the Court concluded that the statute required evidence that the defendant's purpose (in whole or in part) in transporting the funds was to conceal the nature, location, source, ownership, or control of the funds. Id. at 2005. Therefore, a conviction under Section 1956(a)(2)(B)(i) must be based on evidence that the defendant: (i) attempted to transport the funds across the United States border; (ii) knew that those funds represent[ed] the proceeds of some form of unlawful activity; and (iii) knew that such transportation was designed to conceal or disguise the nature, the location, the source, the ownership, or the control of the funds. See id. at 2002. With respect to this third prong, the Court held that a showing that the defendant hid funds during transportation is not sufficient to support a conviction under the statute, even if substantial efforts have been expended to conceal the money. See id. at 2003. Rather, the Court, looking to the meaning of design in the phrase knowing that such transportation is designed. . . to conceal or disguise, concluded that because design means purpose or plan in this context, a conviction requires proof that the purpose  not merely effect  of the transportation was to conceal or disguise a listed attribute of the transported funds. Id. at 2003, 2005. As the Court explained, [t]here is a difference between concealing something to transport it, and transporting something to conceal it; that is, how one moves the money is distinct from why one moves the money, and [e]vidence of the former, standing alone, is not sufficient to prove the latter. Id. at 2005 (internal quotation marks and citation omitted). We turn now to the application of Cuellar to the present matter. Ordinarily, we might remand this issue to the district court to benefit from its views. That is unnecessary, however, because, subsequent to the Cuellar decision, the district court stated its views in considering Ness's renewed motion for bail. See United States v. Ness, No. 01-cr-699, 2008 WL 3842961 (S.D.N.Y. Aug.15, 2008). The district court concluded that the government had provided sufficient evidence to sustain a conviction. See id. at . The court relied upon evidence that the proceeds of the drug sales were being transported to people in Europe and commingled with jewelry and other valuables that Ness declared to be part of his business of transporting such valuables internationally. See id. The court concluded that [t]he transportation was designed to conceal or disguise the `nature' of that which was being transported, or its `location' among the valuables that Ness was allowed to transport and move from one airplane to another at JFK airport, or that the `source' of the items being transported was ecstasy distributions. Id. The government echoes this reasoning on the remand. It contends that the evidence adduced at trial established two purposes behind Ness's transportation of the narcotics proceeds: (1) to ensure the concealment of the funds (including concealment of their nature, location, source, ownership and control); and (2) to allow the transportation of the funds to other narcotics traffickers. The government argues that Ness's actions show that the drug proceeds were delivered to his company at least in part for purposes of concealment, pointing to [his] scrupulous avoidance of any paper trail, his surreptitious shipment of the money by hiding it in packages of jewelry for shipment, and his use of code words for delivery of the funds. The government also notes certain testimony it construes as pertinent: (i) the testimony of Ness's business partner Robert David that Ness stated that he sells confidentiality; and (ii) ecstasy trafficker Guy Madmon's testimony that he didn't want a paper trail saying anything about any money that [he] dropped off, which the government contends supports the jury's conclusion that one reason drug money was delivered to Ness's company was because Ness would conceal its nature, location, source, ownership, and control by failing to document its receipt or existence. We disagree. While such evidence may indicate that Ness was concealing the nature, location, or source of the narcotics proceeds, it does not prove that his purpose in transporting the proceeds was to conceal these attributes. It evidences not why he moved the money, but only how he moved it. Ness's avoidance of a paper trail, hiding of the proceeds in packages of jewelry, and use of code words show only that he concealed the proceeds in order to transport them. Under Cuellar, such evidence is not sufficient to prove transaction or transportation money laundering offenses. The testimony of David and Madmon, while slightly more suggestive that the purpose of Ness's business was to conceal illegal proceeds, is not sufficient to support a finding beyond a reasonable doubt that Ness's purpose in transporting the narcotics proceeds was to conceal one or more of their attributes. We have reviewed the remaining evidence and conclude that it shows only an intent to conceal the transportation, not an intent to transport in order to conceal. Therefore, the transaction and transportation money laundering convictions must be overturned.