Money Disorder

United States v. Garcia, No. 08-1621-cr (2d Cir. December 1, 2009) (Jacobs, Sack, Lynch, CJJ)

In Cuellar v. United States, 128 S.Ct. 1994 (2008), the Court held that, for the crime of transportation money laundering under 18 U.S.C. § 1956(a)(2)(B)(i), the government most prove more than that the money was hidden during its transportation. Rather, it must prove that the “purpose,” not merely the effect, of the transportation was to conceal or disguise the nature, location, source, ownership or control of the money. Thus, the government must prove not just how the money was moved, but why it was moved. The Second Circuit has held that this holding applies equally to “transaction” money laundering under 18 U.S.C. § 956(a)(1)(B)(i), which makes it a crime to engage in certain financial transactions, including the transfer or delivery of cash, for those same purposes.

Here, the court held that, in light of these principles, Garcia’s guilty plea to transaction money laundering lacked a factual basis.

During his allocution, Garcia admitted that he “went to get some money” that he believed was dirty. But when the judge asked whether he understood that his picking up cash “was in fact part of a larger scheme to conceal or disguise the source or ownership of the funds,” he replied “no.” His counsel then proffered that Garcia agreed to pick up the money and deliver it to someone else knowing that the funds were the proceeds of illegal activity and would not be declared as income. He also proffered that Garcia concealed the funds in a cargo truck that was also carrying legitimate cargo. After confirming that Garcia knew that the packages of money were wrapped so as to conceal their contents, the district judge accepted his plea.

Although Garcia challenged the sufficiency of his plea for the first time on appeal, the circuit vacated the plea. The court first noted that Garcia’s acknowledgment of his understanding of the nature of the charge was not enough. The particular charge was “[]complicated and [not] readily understandable by the average layman.” Moreover, Garcia’s allocution “demonstrated actual confusion about the critical concealment element of the offense.” Nothing in his colloquy showed his understanding “that the transaction [had to] be designed to conceal a listed attribute of the funds – or [contained] an admission that Garcia had such a purpose.”

Having found error, the court had no trouble finding plain error here: “the additional elements necessary for Rule 52(b) relief flow naturally under the present circumstances.” Although Cuellar was not decided until after the plea, whether an error is “plain” is “determined by reference to the law as of the time of the appeal,” by which time it was clearly plain. And the error affected Garcia’s substantial rights. The record presented a “reasonable probability that, had Garcia fully understood the nature of the crime he was charged with, he would not have pled guilty.”