Money Laundering Charge Dismissed…

In August of 2012, one of my clients was stopped in Carson County for speeding. He was headed west on Interstate 40 to his home in Arizona. During the course of the traffic stop, the state trooper asked for consent to search the vehicle. My client gave consent to search. During the course of the search, law enforcement officers found approximately $45,000.00 in United States currency. The money was found inside luggage located in the passenger compartment of the vehicle.

My client was arrested and subsequently charged with money laundering. The State also filed a civil forfeiture action seeking to forfeit my client’s vehicle and the $45,000.00 found in the luggage.

In March of this year, the State dismissed the criminal charges and the civil forfeiture action. The vehicle and the $45,000.00 were returned to my client.

Although my client had an extensive criminal history, we were able to show the money was obtained lawfully. Factors that made these cases challenging for the State were: (1) no illegal drugs were found in the vehicle; and (2) there was no attempt to hide the money.

Unlawful Use of a Criminal Instrument…

In pertinent parts, Section 16.01 of the Texas Penal Code states:

(a) A person commits on offense if:
      (1) The person possesses a criminal instrument … with the intent to use the instrument … in the commission of an offense;
(b) For purpose of this section:
      (1) “Criminal instrument” means anything, the possession, manufacture, or sale of which is not otherwise an offense, that is specifically designed, made or adapted for use in the commission of an offense.

I have seen this statute used in situations where a large sum of cash has been found during a traffic stop and the state had little proof to support a conviction for money laundering. A good example would be where a large sum of cash is found in a false compartment in the bottom of luggage.

Four Texas appellate courts have attempted to define the proper application of Section 16.01.

In Eodice v. State, 742 S.W.2d 844 (Tex.App.-Austin 1987, no pet.), the Third Court of Appeals held:

In order to be a criminal instrument within the meaning of the statute, it is not enough that an object can be used to commit a crime. Rather, the object must be one that, as designed, made, or adapted, is distinctively or peculiarly suited to accomplishing a criminal objective. While the opinion in Universal Amusement may have overstated the point by suggesting that the commission of a crime must be the only use for a criminal instrument, it is certainly clear from the statutory definition that the commission of a crime must be the object’s primary purpose.

Eodice, 742 S.W.2d at 846.

In Ex parte Andrews, 814 S.W.2d 839 (Tex.App.-Houston [1st Dist.] 1991, pet. dism’d), the First Court of Appeals echoed the Third Court’s distinction between proof of intent to commit a crime and proof that the instrument was designed, made, or adapted for that purpose. The court held:

[T]he gravamen of the offense … is the physical adaptation of the alleged instrument for a specific criminal intent…. We find that any illegality to be proved is in the inherent characteristics of the object itself as adapted, and not in the conduct of defendants in using the object within a particular criminal episode. An object does not become a criminal instrument by the context of its use, but by the limited nature and specialized criminal use of its own distinctive properties.

Andrews, 814 S.W.2d at 841.

However, in Janjua v. State, 991 S.W.2d 419 (Tex.App.-Houston [14th Dist.] 1999, no pet.), the Fourteenth Court of Appeals has interpreted Section 16.01 inconsistently with Eodice and Andrews. The court stated that “the ontological essence of what constitutes a criminal instrument under Section 16.01 must be determined by both (1) its design or adaptation and (2) the facts and circumstances establishing its intended use.” Janjua, 991 S.W.2d at 426. The court limited its holding by stating that the word “specially” in the statute means that “the object must be a fundamental or critically important element in the commission of the intended offense.” Janjua, 991 S.W.2d at 427 n. 13.

Finally, in Danzi v. State, 101 S.W.3d 786 (Tex.App.-El Paso 2003, writ refused) the Eighth Court of Appeals held that a slim jim tool found in defendant’s vehicle was not shown to be a “criminal instrument” within meaning of statute prohibiting possession of criminal instruments. Although there was evidence that the slim jim could have been used to commit a burglary of a motor vehicle, there was no evidence that it was specially designed, made, or adapted by the defendant for that use. Danzi 101 S.W.3d at 793.

Danzi is an important cases because it discusses the other three cases discussed above and the legislative history of Section 16.01. From a defense point of view, it is important because it is well reasoned and received the blessings of the Texas Court of Criminal Appeals when the Court of Criminal Appeals refused to hear the petition for discretionary review filed by the State.

Civil Forfeiture – Change in Tactics…

Over the last few months I have noticed a change in how civil forfeitures of U.S. currency are being handled in Carson County. During a recent conversation with someone in the know I learned that if the authorities believe the underlying criminal case is strong, the civil forfeiture case will be filed in State court. If the criminal case is believed to be weak, the forfeiture case will be filed in federal court. It is easier for the government to win in federal court due to proof issues placed on the claimant.

Interesting stuff.

Carson County Case Dismissed…

Following up on my January 15 post, the state has dismissed the money laundering charges against one of my clients. The asset forfeiture case associated with the criminal case has also been dismissed. All of my client’s money has now been returned to him.

When I took this case, I didn’t believe the state would be successful in this prosecution — they gave up without much of a fight.

Money Laundering in Carson County…

It appears the District Attorney in Carson County has devised a new strategy to prosecute money laundering cases.  The 100th Judicial District Court has scheduled an initial appearance hearing for 15 newly indicted cases next week. All of the cases are for money laundering — I am defending two of the cases.

Rather than alleging that the money was connected to the illegal drug trade, the indictment in each of the two cases I am defending alleges tax evasion as the underlying criminal activity.  I have always thought it was difficult for the State to successfully prosecute a money laundering case when it alleged that the money was drug related — I think it will be next to impossible for the State to be successful in prosecuting money laundering cases as tax evasion cases.

It will be interesting to see how this plays out.

Money Laundering / Deschenes v. The State of Texas

From a criminal defense prospective in money laundering cases, Deschenes v. The State of Texas, 253 S.W.3d 374 (Tex.App.–Amarillo 2008, pet. ref’d.) is one of the most important appellate decisions to come along in quite some time.

Mr. Deschenes was stopped for speeding on Interstate 40 in Gray County, Texas (the county seat is Pampa – just 60 miles east of Amarillo) by the Texas Highway Patrol. The trooper issued him a warning ticket and then asked him if he could search his car. Mr. Deschenes consented and $17,620.00 was found in the trunk of the car. Mr. Deschenes was arrested and indicted for money laundering under the provisions of § 34.02 of the Texas Penal Code.

At trial, the State failed to offer any evidence as to any specific criminal activity. The State’s principal witness, the arresting officer, made several references to “drug trafficking” and “drug smuggling” while generally describing the activities of individuals engaged in drug trafficking. There was no evidence connecting Mr. Deschenes and the money to any specific felony. The jury found him guilty and he was sentenced to a term of  ten years confinement in the Texas prison system (the prison term was probated for ten years) and a fine in the amount of $10,000.00 was imposed. Mr. Deschenes appealed.

The Seventh Court of Appeals in Amarillo reversed the trial court’s judgment of conviction and rendered its own judgment of acquittal. The Court stated that:

In order for a conviction for money laundering to be upheld, there must be direct or circumstantial evidence of a temporal connection, or nexus, between the money and some criminal activity.

Deschenes at 381-382

The Court noted that the evidence tending to establish a connection between the $17,620.00 and some unnamed criminal activity amounted to mere conjecture. In support of a nexus between the money and some unidentified “criminal activity,” the State pointed to some 22 profiling characteristics and a positive alert by a narcotics dog. The Court was not impressed and went on to write:

Profiling characteristics are normally factors courts consider when determining whether Fourth Amendment rights are implicated by a brief investigatory detention. The mere fact that a person’s actions match a drug courier profile and that person is carrying a large amount of money that might be involved in some illegal activity is insufficient to establish probable cause to justify forfeiture, and it is insufficient to establish a nexus between the money and some criminal activity beyond a reasonable doubt.

Deschenes at 385

If you have been charged with money laundering in Texas, the facts of your case should be reviewed in light of the Deschenes decision.

To read the Court’s opinion, click here.

Money Laundering / Penal Code § 34.02

I am seeing more and more cases involving money laundering. It seems law enforcement officers are stepping up their efforts to seize money believed to be associated with the trafficking of illegal drugs in Texas. Just like my illegal drug cases, the money laundering cases I am seeing result from traffic stops on Interstate 40.

The Texas Penal Code provides that a person commits an offense if he knowingly:

  • acquires or maintains an interest in, conceals, possesses, transfers, or transports the proceeds of criminal activity
  • conducts, supervises, or facilitates a transaction involving the proceeds of criminal activity
  • invests, expends, or receives, or offers to invest, expend, or receive, the proceeds of criminal activity or funds that the person believes are the proceeds of criminal activity
  • finances or invests or intends to finance or invest funds that the person believes are intended to further the commission of criminal activity

“Criminal Activity” means any offense, including any preparatory offense, that is (1) classified as a felony under the laws of Texas or the United States, or (2) punishable by confinement for more than one year under the laws of another state.