Money Laundering

We often think money laundering refers to the “cleaning” of drug money, but the crime of money laundering does not always require the laundering of drug money. Under a separate statute, Penal Code section 186.10, it is unlawful to take the proceeds derived from any criminal activity and conceal the source of the funds via a transaction using a financial institution (or combination thereof). Section 186.10 requires that the transaction must be more than $5,000 within a seven-day period or a total of $25,000 within 30 days (for example, six $4,500 transactions). Additionally, the transaction or transactions must be intended to obscure the source of the funds. (Penal Code section 186.10.)

In California, there is a separate law that treats drug money laundering (Health and Safety Code section 11370.9.). Unlike Penal Code section 186.10, the drug money laundering law does not require that the money be laundered through a financial institution and sets the dollar threshold at $25,000 within a 30-day period (there is no $5,000 threshold).

Both crimes require the intent to facilitate criminal activity or the knowledge that the money/proceeds were derived directly or indirectly from criminal activity.

Steve was “fencing” stolen merchandise out of a warehouse. He then took the proceeds and deposited the money in the three different joint bank accounts he held with his wife. In order to circumvent detection, he would deposit various amounts under $5,000 in the different bank accounts but those deposits combined amounted to over $25,000 each month. Steve was charged with receiving stolen merchandise (Penal Code section 496) and money laundering under Penal Code section 186.10, as a separate criminal act.

Walter ran a methamphetamine operation that brought in close to $50,000 a month. In order to hide the origins of these proceeds, he opened several carwashes in Orange County. By manipulating the carwashes’ financial books, he concealed the drug proceeds. Walter was charged with the felony sale of a controlled substance (Health and Safety Code section 11379) and with the money laundering of drug sale proceeds in violation of Health and Safety Code section 11370.9.

In addition to potential violations of your constitutional rights, which are always a defense your Orange County criminal defense attorney will explore, and which are defenses to all crimes, money laundering charges can be challenged on several grounds.

Intent and/or knowledge: In both offenses, there must be the element of intent to facilitate a crime and/or the knowledge that the proceeds were derived from criminal activity. For example, in the case of Steve’s joint bank accounts, the prosecution would likely charge Steve’s wife also. But if Steve’s wife did not know of her husband’s criminal activity and believed his innocent stories that the funds were from odd jobs he was picking up, her money laundering defense attorney would have a winnable defense to the charge.

Financial institution: Penal Code section 186.10 requires that the illegally derived proceeds are transacted through a financial institution. It would not be money laundering under this section if the money was concealed by investing in a business such as Walter’s carwash. However, this requirement does not apply to laundering drug money in violation of Health and Safety Code section 11370.9.

Amounts deposited: The statutes specify minimum dollar amounts in commission of the crime. A person who deposits under those threshold amounts cannot be charged with money laundering. However, one who is laundering drug proceeds could conceivably be charged under Penal Code section 186.10, if the $5,000 threshold is met even though not reaching the $25,000 threshold delineated under Health and Safety Code section 11370.9. In all cases though, a transaction, or combination of transactions, of less than $5,000 per week and/or under $25,000 per month, even $24,999, would be a defense to the money laundering charge.

Under both statutes, each violation of the section is considered a separate, punishable offense. For example, under Penal Code section 186.10, three $5,000 financial transactions separately conducted each within any seven-day period could result in three separate charges. Under Health and Safety Code section 11370.9, each one of Walter’s carwashes would constitute separately punishable offenses.

A violation of Penal Code section 186.10 can be charged as a misdemeanor or felony (a wobbler). Whether a defendant is charged with a misdemeanor or felony will depend upon a number of factors including how aggressive the county district attorney prosecutes these crimes, the defendant’s criminal history, whether the defendant has been convicted on money laundering charges before, the amount of money laundered, and the nature of the underlying crime.

If convicted on misdemeanor money laundering under this section, the defendant may be sentenced to up to one year in county jail and/or up to a $1000 fine. In most cases, the convicted misdemeanor defendant will get a grant of probation and will be ordered to pay fines.

If convicted on felony money laundering under this section, the defendant faces a sentence two, three, or four years in county jail (Penal Code section 1170(h)) and/or a maximum fine of up to $25,000 or two times the amount of the money laundered, whichever is greater. Even felony convictions often avoid substantial jail time, getting a grant of probation instead, depending on the facts of the crime, the defendant’s criminal history, and the skill of the defendant’s money laundering defense attorney.

The fines can substantially increase upon a second or subsequent conviction for violation of this section to a maximum fine to $500,000 or five times the value of the money laundered.

As with Penal Code section 186.10, this offense is a wobbler, with the same penalties and fines, but interestingly does not increase the fine for second or subsequent conviction for violation of the statute.

Have you been charged with money laundering?

ORANGE COUNTY CRIMINAL DEFENSE ATTORNEY
WILLIAM WEINBERG CAN HELP

Attorney William Weinberg has been defending individuals faced with criminal charges for over 30 years. He is committed to obtaining the best outcome possible for his clients. If you have been charged with money laundering or any other crime by the state of California, Mr. Weinberg offers a complimentary consultation where he will review the charges against you and give you an honest assessment of your options. He may be contacted by calling his Irvine office at (949) 474-8008 or by emailing him at bill@williamweinberg.com.