The federal money-laundering statute, 18 U.S.C. § 1956(a)(1)(B)(i), makes it a crime for any person, “knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity,” to conduct or attempt to conduct “such a financial transaction which in fact involves the proceeds of specified unlawful activity … knowing that the transaction 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.” (Emphasis added.)
In United States v. Aybar-Peguero, Nos. 21-1711(L), 21-1847(Con) (2d Cir. July 6, 2023) (Walker, Lee, and Nathan), the defendant pleaded guilty to this offense—known as “concealment money laundering”—and to drug trafficking. He admitted that he sold narcotics out of his convenience store and deposited the proceeds into his bank accounts along with his store’s legitimate earnings. But at his guilty plea, he repeatedly failed to acknowledge that he had engaged in these transactions for the purpose of concealing the proceeds of his drug trafficking. Instead, he said that his purpose was “to save my money.” The District Court nevertheless accepted the plea, without objection.
On appeal, the Circuit unanimously held that the District Court committed reversible plain error in accepting the plea because it lacked an adequate factual basis. Judge Walker’s opinion for the Court noted that the “concealment element of [the] statute requires that the purpose, not merely the effect, of the endeavor must be to conceal or disguise the proceeds of illicit activity.” (Emphasis added). Here, however, the defendant “never acknowledged a concealment purpose, and there was not sufficient evidence elsewhere in the record to warrant accepting the plea.” On that score, the Circuit rejected the government’s argument that “facts adduced after a plea hearing may properly be considered by a district judge in accepting a plea.”
The Court further held that the error affected the defendant’s “substantial rights” and “seriously harmed the legitimacy of the judicial proceeding” because it “appears likely that [the defendant] would not have pled guilty” if he had understood the mens rea requirement of concealment money-laundering. Accordingly, the Court vacated his money-laundering conviction and the sentences for both counts of conviction, and remanded for further proceedings.
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