The federal courts continued in 2016 to produce a stream of cases pertaining to money laundering. We focus on three below because they involve analysis of basic issues that frequently arise in money laundering litigation.
The first case tests the money laundering statute’s reach in prosecution of an alleged international fraud perpetrated primarily outside of the United States—an increasingly common fact pattern as cross-border cases proliferate and the U.S. Department of Justice (DOJ) prosecutes more conduct occurring largely overseas. The other two cases involve defense victories that focus on critical issues of mental state: the question of specific intent under the BSA, and the question, under the money laundering statutes, of knowledge by a third party that a transaction involved proceeds of another person’s crime. The issue of third-party knowledge is often crucial in prosecutions of professionals.
United States v. Georgiadis, 819 F.3d 4 (1st Cir. 2016).A case from the First Circuit underscores the DOJ’s global reach. In 2014, Evripides Georgiadis, of Greece, was convicted in the District of Massachusetts of conspiracy to commit wire fraud, 11 substantive counts of wire fraud, and conspiracy to commit money laundering. The indictment alleged that between 2007 and 2011, Mr. Georgiadis held himself out as a representative of a multibillion dollar private equity fund in Luxembourg to defraud developers seeking financing for, among other things, alternative energy projects.
Developers deposited substantial monies based on agreements with his company to receive financing. According to court documents, Mr. Georgiadis and his co-conspirators transferred the developers’ deposited money out of the United States, never financed any projects, and stole more than $7 million. Mr. Georgiadis and his co-conspirators ran the conspiracy outside Massachusetts and indeed outside the United States. Nonetheless, Mr. Georgiadis was indicted in Massachusetts, arrested at a border crossing in Croatia, and extradited to the United States.
Mr. Georgiadis appealed his convictions, arguing that venue in the District of Massachusetts was improper because no overt act in furtherance of the conspiracy occurred in Massachusetts. His claim failed.
The First Circuit began by reasoning that an overt act, in the case of money laundering, could be an act of “concealment” because the money laundering was primarily a crime of concealment. Borrowing from mail fraud cases, the First Circuit held that a “lulling communication” that was “designed to lull the victims into a false sense of security, postpone their ultimate complaint to the authorities, and therefore make the apprehension of the defendants less likely,” made in or into Massachusetts would qualify as an...
