Attorneys Not Subject to Criminal Penalties under Federal Money Laundering Statute

The United States Court of Appeals for the Eleventh Circuit held attorneys cannot be penalized criminally for accepting tainted money from clients, under a Federal money laundering statute. The Federal statute, 18 U.S.C. § 1957, excludes “any transaction necessary to preserve a person’s right to representation as guaranteed by the Sixth Amendment to the Constitution” from criminal penalties associated with money laundering; knowingly engaging or attempting to engage in a monetary transaction in criminally derived property that is of a value greater than $10,000 and is derived from specified unlawful activity. The funds remain subject to civil forfeiture, but attorneys who accept such funds for attorney fees, in accordance with legal representation, have not committed a crime.

In the case of U.S. v. Velez, Kuehne, and Ochoa, a Miami attorney, Benedict Kuehne, was hired by the defense team of a reputed Columbian drug lord to examine the source of funds used to pay Defendant’s legal fees. Kuehne enlisted the assistance of a Columbian attorney and a Columbian accountant, to help examine the money trail. After careful examination, Kuehne wrote opinion letters finding the money was legitimate and forwarded the $5.3 million which had been paid to him, as an intermediary, to the defense team. The Government alleged Kuehne had used falsified documents in determining the legitimacy of Defendant’s funds.

The District Court dismissed the count of the indictment relating to money laundering, holding transactions made for the purpose of securing legal representation were exempt under Federal statute. On appeal, the Circuit Court affirmed the ruling, differentiating the criminal statute from civil forfeiture. The statute governing civil forfeiture, 21 U.S.C. § 853, contains no exemption for funds paid for legal representation. In Caplin & Drysdale, Chartered v. U.S., the Supreme Court of the United States refused to read into the statute an exemption for criminal proceeds used to pay attorneys’ fees, stating Congress has the authority to legislate such a clause should they so choose. 18 U.S.C. § 1957, rather, explicitly exempts such transactions from criminal penalty.

Velez exemplifies the exemption in the Federal money laundering statute for transactions relating to legal representation. Although funds accepted for legal representation may be forfeited civilly if investigation reveals those funds are tainted, an attorney is not subject to criminal penalties for accepting those funds. The Sixth Amendment’s guaranteed right to legal representation in criminal proceedings should not be infringed upon by attorney apprehension of criminal penalty, solely for acceptance of payment.

For a confidential consultation in matters involving money laundering or serious felony drug crimes, contact the Law Offices of Marc Neff at (215) 563-9800 or email Marc@nefflawoffices.com.