Monday, October 26, 2009

Money laundering and legal fees

In United States v. Velez (Barkett, Hull, D.J. Quist), the government lost its appeal about the meaning of the plain language of 18 U.S.C. §1957(f)(1), which excludes from the scope of §1957(a) "any transaction necessary to preserve a person's right to representation as guaranteed by the sixth amendment to the Constitution." Here, the defendants were a Miami attorney, a Columbian attorney, and a Columbian accountant. They had been hired by an accused Colombian drug dealer's legal defense team to determine whether funds earmarked for legal fees were derived from criminal proceeds. After his review, the Miami attorney issued an opinion letter that the funds from the accused dealer to him, as an intermediary, were not comprised of the proceeds of criminally derived property.

The Court held that the district court was "eminently correct" in holding that the defendants (the Miami attorney, the Colombian attorney, and the Colombian account) were not subject to criminal prosecution under §1957(a) in light of the plain language of the exemption in §1957(f)(1). In doing so, the Court distinguished the discussion of attorney's fees in Caplin & Drsydale as involving a statute involving civil forfeiture of criminally derived proceeds; indeed, the Court believed that Caplin & Drysdale supported the conclusion that such proceeds had been statutorily exempted from criminal penalties. has more about this case at this link.

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