Money Laundering Nonsense [from Black Unicorn]

Rohit Khare (
Mon, 10 Nov 1997 14:20:04 -0800

Black Unicorn gave a spectacular talk at DCSB last year. He defintely
knows whereof he speaks. In this case, though, it's just a bit of opinion
showing through. RK

Other bits from the article:

Congress made money laundering a federal crime in 1986 as part of the Anti-Drug
Abuse Act. The law prohibits people from trying to conceal their illicit
proceeds or using the money to further their criminal activity. At the time,
Congress envisioned the law being used against large-scale drug traffickers or
organized crime.

To that end, the commission set a high sentence for money laundering in 1987
when it drew up the sentencing guidelines for federal crimes.

The stiff sentences also apply to defendants who make no attempt to cover up
their proceeds. Caba laundered money by depositing it into a bank, even though
his deposits were by check and he paid taxes on his proceeds.


Some also will refuse to impose the sentence if they believe the crime seems
removed from the conduct the money-laundering statute was intended to deter.

According to the sentencing commission, the judicial dissatisfaction is
great. Judges in 15.4 percent of money-laundering cases not tied to drugs
departed from the sentencing guidelines to impose less severe sentences. That
rate is 32 percent higher than the overall departure rate for all crimes.

The commission proposed rewriting the money-laundering guidelines in 1995 to
address these concerns. It wanted to tie money-laundering sentences to the
seriousness of the underlying crime and take into account the lengths
defendants went to hide the money.

The proposals went nowhere, however, because they got tangled up in a
controversial commission recommendation that would have removed some of the
discrepancies in sentences for powder and crack cocaine. The Justice
Department opposed the recommendations, and Congress did as well, though
lawmakers focused all the attention on the cocaine issue.

------- Forwarded Message

Date: Mon, 10 Nov 1997 15:06:09 -0600
From: Black Unicorn <>
Subject: Money Laundering Nonsense.

Note- cypherpunks: reply by mail, I'm not on the list any longer.

Chicago Tribune
Monday, November 10, 1997

Money Laundering law netting more small fry.
Prosecutors putting new tool to work.

A sentencing weapon Congress intended for use against drug lords is being
wielded against other defendants. Judges and others say this has
diminished legal fairness.

By Jan Crawford Greenburg
Washington Bureau

Washington- Jose Caba considered himself a hardworking, law-abiding man,
and immigrant who built a business selling groceries in a poor Brooklyn

But when he started illegally redeeming food stamps and depositing the
proceeds into a bank account, prosecutors thought otherwise. They accused
him of money laundering and sought a harsh sentence.

Caba, who thought he was only bending administrative rules, isn't the kind
of criminal Congress had in mind when it decided to give prosecutors a
weapon to bring down powerful drug lords. Nevertheless, he is one of a
growing number of defendants who commit routine fraud and find themselves
facing big-time charges of money laundering.


More and more prosecutors are invoking [money laundering statutes] in
simple fraud, bribery and embezzlement cases, a trend that doesn't sit well
with many federal judges or the U.S. Sentencing Commission.

In a strongly worded report, the commission... is recommending that the
sentences for money laundering be reworked. The penalties are unfair, the
commission said, because they often vastly exceed the seriousness of the

Caba would have faced 2 to 2 1/2 years in prison for food stamp fraud, but
because he deposited the funds in a bank- thereby meeting the definition of
laundering the money- he was looking at 10 to 12 years.


Nationally, statistics show a marked increase in money laundering cases.
In 1995 prosecutors charged 1700 people with money laundering, up from 250
in 1990. More than half of the defendants charged in 1995 were involved in
non-drug related crimes.

Critics say the charged is used even more than the figures show because
prosecutors threaten defendants with the charge to get them to plead guilty
to the underlying crime.

"It has tremendous implications in the criminal justice system because
prosecutors can use it as a tremendous bargaining stick..." said Gordon
Greenberg, a defense attorney and an expert on money laundering. "Every
single crime, theoretically, can be converted into money laundering because
the statute is that broad."

What's more, prosecutors in some areas routinely file the charge, while
others decline to do so. As a result, "proportionality is lost and
appropriate uniformity is lost," said Jonathan Wroblewski, director of
legislative and public affairs for the sentencing commission.

[] stiff sentences also apply to defendants who make no attempt to cover up
their proceeds. Caba laundered money by depositing it into a bank, even
though his deposits were by check and he paid taxes on his proceeds.

"For all intents and purposes, if you use your ill-gotten gains, it's money
laundering." said Alan Chaset, a lawyer who chairs the American Bar
Association's committee on sentencing guidelines. "If you take money and
put it in a bank and then withdraw it and buy a stick of gum, it's money

Some judges refuse to impose the sentence in cases where there was no
elaborate scheme to conceal the money, such as a 1994 case in which
prosecutors charged a defendant with money laundering when he put cash from
drug sales into a shoe box. [...]

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