Monday, October 26, 2009

Eleventh Circuit Affirms Dismissal Of § 1957(a) Prosecution Against Kuehne - Payment Was For Constitutionally Protected Legal Fees

In U.S. v. Gloria Flores Velez (09-10199), the Eleventh Circuit affirmed the district court's opinion and held "The district court was eminently correct in holding that Defendants are not subject to criminal prosecution under § 1957(a), because the plain language of § 1957(f)(1) clearly exempts criminally derived proceeds used to secure legal representation to which an accused is entitled under the Sixth Amendment."
The Government charged Defendants with money laundering in violation of 18 U.S.C. §§ 1956(h) and 1957. The district court dismissed Count One on the ground 1 that Defendants are exempt from criminal prosecution under § 1957(a) because the plain language of § 1957(f)(1) excludes from the statute’s scope “any transaction necessary to preserve a person’s right to representation as guaranteed by the sixth amendment to the Constitution.” The parties do not dispute that the money allegedly laundered was used for the payment of legal fees. This appeal presents an issue of first impression in this circuit regarding the meaning of the exemption in § 1957(f)(1).
Kuehne, a Miami attorney, was hired by the Miami-based criminal defense team of Fabio Ochoa, an accused Colombian drug leader, to review the source of funds to be used to pay Ochoa’s legal defense fees in the United States. The purpose of the review was to determine whether the funds to be used for Ochoa’s defense were derived from criminal proceeds. Kuehne hired Colombian attorney Saldarriaga and Colombian accountant Velez to assist him.  After conducting his investigation, Kuehne issued “opinion letters” in which he concluded that several monetary transfers from Ochoa to him, as an intermediary, were not comprised of proceeds of criminally derived property. Kuehne then transferred the fees, totaling approximately $5.3 million, to Ochoa’s defense team. The Government alleged that Kuehne and his co-defendants supported their conclusion that the funds were untainted with false documents and statements, knowing that the funds were criminally derived and intending to conceal their true source.
The court then cited to a brief filed in the United States Supreme Court in 1989 by the United States Solicitor General which stated:
The United States Solicitor General explained the distinction between civil forfeiture and criminal penalties in his 1989 brief to the Supreme Court in United States v. Monsanto, 491 U.S. 600 (1989), a companion case to Caplin & Drysdale.  The brief states explicitly that, although the criminal defense bar had urged Congress “to exclude from [civil] forfeiture those assets that the defendant wants to use to pay an attorney, Congress ha[d] declined to do so.” United States v. Monsanto, Gov’t Br., 1989 WL 1115135, at *33-34.
In this statute, Congress included a provision exempting from forfeiture money used to pay criminal defense fees and, therefore, the district court properly dismissed the count.


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