Samuel Ness was convicted of money laundering offenses in connection with his armored car business, which had received and distributed millions of dollars in narcotics proceeds. He was sentenced to 15 years in prison. The Supreme Court vacated the decision and sent the case back to the lower court for further consideration in light of its decision in Cuellar v. United States, 128 S.Ct. 1994 (2008), which placed a whole new interpretation on what money laundering is. Taking Cuellar into consideration, the lower court found that the evidence in US v. Ness, once thought sufficient, was insufficient and reversed the conviction.
Cuellar held that, for money laundering offenses, the government must prove that the defendant’s purpose, “in whole or in part, was to conceal the nature, location, source, ownership or control of the funds.” A showing that a defendant simply hid funds during transportation is not sufficient to support a conviction, since there is “a difference between concealing something just to transport it, and transporting something” with the purpose of concealing the nature, location, source, ownership or control of the funds.
Defendant was convicted of two money laundering counts. The appeals court reversed finding no evidence that the defendant’s purpose was to conceal the nature, location, source, ownership or control of the money. All the government proved was “how” the defendant moved the money, not “why.” Even the defendant’s “avoidance of a paper trail” and using code words showed “only that [the defendant] concealed the proceeds in order to transport them. Under Cuellar, such evidence is not sufficient to prove” money laundering.
Can the Cuellar case affect past convictions? Maybe. If a defendant can still file a direct appeal, he or she can surely raise the claim that the statute (as currently understood) does not reach the conduct pled to. But what a defendant said, if he or she pled, is crucial, because if the intent was to “conceal” the fact that the money was from narcotics, the defendant will be stuck with their admission and more than likely lose. If a defendant pled guilty to conspiracy to launder money rather than actual money laundering, the Government (and maybe the court) might seize upon that fact to distinguish Cuellar as the court seemed to do in Fleming, 287 Fed. Appx. 150; 2008 U.S. App. LEXIS 17737 (3rd Cir. 2008). So I would not open any champagne bottles just yet.
If the defendant’s right to appeal has expired, a defendant can file a 2255 (habeas corpus) petition. But there are problems here as well. This is the situation that the Supreme Court addressed in the case of Bousley v. United States, 523 US 614 (1998), when Mr. Bousley was moving to set aside his gun conviction in light of the Supreme Court’s unexpected interpretation of the word “use” in Bailey vs. United States, 995 F. 2d 1113 (CADC 1993), dealing with 924(c)’s prohibition of “using” a gun during or in relation to a drug trafficking charge.
The court said, “Where a defendant has procedurally defaulted a claim by failing to raise it on direct review, the claim may be raised in habeas only if the defendant can first demonstrate either a ‘cause’ (a justifiable reason why he did not raise the claim on direct appeal) and actual ‘prejudice,’ (that not having raised it prejudiced him), or that he is ‘actually innocent.’”
The court rejected the arguments that it was “futile” to have made this argument given the state of the law at the time and that the court committed error in not correctly explaining the elements of the crime. The court stated, “While we have held that a claim that ‘is so novel that its legal basis is not reasonably available to counsel’ may constitute cause for a procedural default, petitioner’s claim does not qualify as such. . . . Indeed, at the time of petitioner’s plea, the Federal Reporters were replete with cases involving challenges to the notion that ‘use’ is synonymous with mere ‘possession.’” The court did say, however, that “actual innocence” was a proper basis, where a participant, for example, did not know the purpose of the overall conspiracy was to conceal the identity of the owner or source of the proceeds:
“Petitioner’s claim may still be reviewed in this collateral proceeding if he can establish that the constitutional error in his plea colloquy ‘has probably resulted in the conviction of one who is actually innocent.’ To establish actual innocence, petitioner must demonstrate that, ‘in light of all the evidence, it is more likely than not that no reasonable juror would have convicted him of the crime of money laundering.’”
I hope that this case may bring freedom to someone. It is about time.