Tuesday, January 13, 2009

White Collar - Federal Court Dismisses Count of Indictment against Noted Miami Attorney

The United States District Court for the Southern District of Florida dismissed a count of an indictment against a noted criminal defense attorney. The count at issue had charged the attorney and others with conspiracy to launder money. In essence, the facts alleged are that reputed cocaine smuggler, Fabio Ochoa, retained a team of attorneys to defend him in a criminal action brought by the United States. The defense team retained the defendant criminal attorney to perform an investigation into the source of the funds being used by Ochoa The purpose was to verify that such funds were not tainted.

The attorney performed the investigation and determined that the source of the funds was lawful. The funds were transferred from Ochoa to the attorney's account. The attorney then authorized a series of wire transfers from his account to the defense team. Almost $5.3 million were transferred in this manner.

The government charged a count of a multi -count indictment alleging that the defendant attorney and others conspired to launder criminally derived proceeds having a value greater than $10,000 with the purpose of paying Ochoa's legal fees.

The charge was based on a conspiracy to violate 18 U.S.C. Section 1957(f)(1). The defendant argued that there is an exemption to that section when the transaction is necessary to preserve a person's right to representation. The government argued that the exemption language of the statute had been superseded by the Supreme Court in Caplan & Drysdale Chartered v. United States, 491 U.S. 617 (1989). The government argued that the Supreme Court had held in that case that there is no Sixth Amendment right to use illegal narcotics proceeds to pay attorneys' fees. The district court determined that the government had erred in its analysis of Caplan & Drysdale. It ruled that the Supreme Court had held only that the Sixth Amendment did not prohibit the forfeiture of criminal proceeds paid to attorneys. Thus, the mere transaction of paying fees to a criminal defense attorney could not stand as a basis for the money laundering charge.

The defendant pressed further arguing that the Section 1957 exemption extended not only to attorneys for criminal defendants, but to anyone in the chain involved in the payment for legitimate defense services. The court refused to extend the exemption this far. It held that the statute did not exempt everyone handling tainted funds involved in providing defense services. However, the court refused to decide which others would fall within the exemption.

It bears remembering that this was one count of a multi-count indictment. The remaining counts were unaffected by the decision.

The case may be found under United States v. Gloria Florez Velez, et al., Southern District of Florida, case no. 05-20770-CR-Cooke/Bandstra.

No comments: