Money laundering generally involves financial transactions that are made to hide criminal activity or to process funds that are made through criminal enterprises. Money laundering laws are covered in California Penal Code Sections 186.9.186-10.
Money laundering in California is defined as the transfer of money obtained from illegal activity to legitimate outlets or banks.In California, money laundering charges may be brought against you if you knowingly make a deposit; withdraw money; initiate an electronic or wire transfer; exchange money into a foreign currency; write a check or benefit from funds derived from illegal activity involving money laundering. Money Laundering may be considered a federal crime or a misdemeanor, depending on the nature of the crime, the amount of the transaction, and duration of the crime, as follows.
Elements of Money Laundering
In California, the prosecution must show evidence of financial transactions that meet the criteria noted in the penal code of California. These laws list the activities that qualify as illegal financial transactions, such as withdrawals, bank deposits, fund transfers, wire transfers, payments and other types of financial activities. To be convicted, it must be proven that you engaged in one of these illegal transactions with a financial institution such as a credit union, bank, trust company or other type of financial organization listed under state law.
You must have performed at least one transaction within seven days with a value of at least $5000. Or, you must have done at least one transaction within the last 30 days with a total value of at least $25,000. Under California law, attempts to conduct transactions that do not go through still may qualify as money laundering.
In addition to presenting evidence of illegal financial transactions, the state prosecutor must show that you intended to engage in money laundering. The prosecution must prove that you made illegal financial transactions with the intent to promote, carry out or pay for any criminal activity. The prosecutor also may establish that you engaged in money laundering by showing evidence that you acted with knowledge regarding the source of the money.
Federal Crime of Money Laundering
The federal crime of money laundering primarily targets drug traffickers, organized crime, tax evasion and the like. A money laundering felony falls into two categories, including:
- A financial transaction involving proceeds from an illegal activity with full knowledge, and either the intent to promote illegal activity or to conceal the illegal source.
- Attempting or engaging in a financial transaction of more than $10,000 in illegally derived dollars.
Misdemeanor Money Laundering
In California, there are separate definitions and penalties for variations in violations under money laundering laws. Generally speaking, California money laundering violations may fall into two categories, including: Penal Code 186.10 PC and Health & Safety Code 11370.9 HS
Money Laundering Violation – Penal Code 186.10 PC
- Denoted by money that relates to any type of crime.
- May involve active participants in transactions, as well as, those who financially benefit from money laundering, but do not participate in the crime of laundering.
Health & Safety Code 11370.9 HS Violation
- Denoted by money that is specifically earned from drug crimes.
- May involve active participants in transactions, as well as, those who financially benefit from money laundering, but do not participate in the crime of laundering.
The difference between a federal crime of money laundering and misdemeanor money laundering is the degree of the violation in terms of the nature of the transaction, the size of the transaction and other related crimes. Federal Crime of Money Laundering charges are usually reserved for the most serious violations.
Laws and Penalties
Anyone who is convicted of a misdemeanor for money laundering in California may be subject to up to one year in county jail. Anyone convicted of a federal crime for money laundering is subject to a longer prison term in correlation with the amount of money laundered. A conviction may require a fine up to a maximum amount of $250,000 or double the value amount of the financial transactions, whichever is greater. Penalties may increase if you have been convicted of felonies or are convicted of future felonies.
Below is more information about potential penalties for a money laundering conviction under state law:
- California laws have established increased prison sentences to correlate with the amount of money in the transaction. State law states several increased prison terms for illegal transactions of up to $2.5 million.
- Being convicted of money laundering in California also may require you to pay a fine as high as $250,000, or double the value of the illegal transactions, whichever is greater.
- If you have a previous conviction for money laundering, the fines can be increased up to $500,000. Or the fine can be five times the value of the illegal transaction, whichever is greater.
- The state prosecutor may ask for a fine and prison term during your sentencing.
- State law identifies separate offenses as every illegal transaction over $5000. State prosecutors may charge every illegal offense separately, and also may ask for a fine and sentence for each one.
Money Laundering Defenses
To be convicted of money laundering, the following must be proven.
- Intent to launder money;
- Knowledge that the money came from an illegal source;
- Police conduct was fair,
- Money involved a bank;
- And/or you knowingly financially benefited from the transaction.
The amount of money laundered and the nature of the illegal activity play a significant role in penalties. However, a good defense attorney may be able to create reasonable doubt that you acted illegally. For example, your attorney may argue you did not intend to support any type of illegal activity. Or, you did not know that you were handling money that came from the commission of crimes. It also is possible the defense can argue that the money you laundered did not exceed the minimum amounts under state law.
For instance, say that you run an illegal prostitution business and a legal music editing business. You deposit the funds for both businesses in the same account. You are arrested for money laundering because you wrote a $7000 check from that account for rent. The state prosecutor has to prove on the day you wrote the check, a minimum of $5000 of the money in the account came from the illegal business and not the legal business. If this cannot be proven, you cannot be convicted of money laundering in the state.
It also is possible to argue that you had a lack of intent or lack of knowledge. The prosecution must show that you intended to engage in criminal activity, and also had knowledge the financial transactions were criminal activity. If your attorney can show you did not have this knowledge, it become impossible for the prosecution to secure a conviction.
Case Comparisons
You may be convicted under Penal Code 186.10 PC if your transaction involved more than $5,000.00 in a seven day time period. Under the Health & Safety Code 11370.9 law, you cannot be convicted unless the transaction is more than $25,000.00 in a thirty day time period. That said, it is extremely important to recognize that any money laundering charge is a serious one. Thus, it is vital to secure a good attorney who can demonstrate strong support for your case.
Statute of Limitations
In California, there is a five year statute of limitations for federal crime money laundering. Depending upon the laws in your specific case, the statute of limitations may vary, but must allow for you to receive due process of the law.
Money Laundering Case Examples
California Man Must Pay Macy’s $900,000 Restitution After Money Laundering Scheme
A California man was ordered in November 2017 to pay $900,000 in restitution to Macy’s after pleading guilty to money laundering and mail fraud in a $3.5 million distribution scheme. Suraj Patel from Long Beach, was sentenced to an unnamed length of time in prison and ordered to pay restitution in the case.
Rudy Rampertab from Ocoee, Florida, also was sentenced to six months in prison for money laundering and mail fraud. Court documents noted that Rampertab worked for Macy’s and managed the company’s distribution center in Carson. He began in 2010 to divert Macy shipments to Patel, who then sold them through various companies.
Ex-USC Football Player Sentenced for Money Laundering
A former football player for the University of Southern California was convicted late last year for running an illegal criminal enterprise that included money laundering, illegal drugs and gambling. Owen Hanson, 36, was sentenced to 21 years in federal prison and lifetime supervised release.
The illegal activity started when he was playing football for USC, where he sold illegal drugs and steroids to other players. His criminal organization – ODOG – sold thousands of kilograms of heroin, methamphetamine, marijuana, steroids and cocaine for more than 10 years. He also operated an illegal gambling house that was focused on football and other sports. The organization made threats to customers to enforce payment.
One of the victims stated that Hanson’s business tried to collect a debt of $2 million by sending DVDs to the victim and his wife showing people having their heads cut off. But Hanson’s illegal criminal activities ended when an FBI agent undercover made a drug deal with him.
The Benex Scandal
This indictment involved suspected transactions in excess of nearly $7 billion charging Lucy Edwards, a former vice president of the Bank of New York; Peter Berlin; her husband; Aleksey Volkov and six others involved with conspiring to take deposits illegally and to transfer money without proper credentials. Some of those charged accepted a plea agreement. The Bank of New York agreed to pay $38 million in penalties and victim compensation for fraud and money laundering violations.
Meyer Lansky Accountant Scam
Meyer Lansky has been deemed the one who coined the term money laundering; siphoning off roughly $1 billion from his casino empire into Swiss bank accounts and businesses in Hong Kong, South America and the Caribbean. He was never convicted before his death.
References
- http://statelaws.findlaw.com/california-law/california-money-laundering-laws.html