Money laundering and embezzlement are two of the most commonly investigated and charged “white collar” offenses. While these crimes may be non-violent offenses committed by individuals who often have no criminal history, the consequences of money laundering and embezzlement charges can be significant.
Money laundering is a federal crime that involves transferring money generated by illegal activity into a legitimate source or through multiple bank transactions to “clean” the money and disguise the source, so as to avoid criminal prosecution for the illegal activity and protect the money from seizure.
Money laundering is a “specific intent” crime. This means that the prosecution must prove beyond a reasonable doubt that the defendant not only intended to engage in money laundering but did so with the desire to transfer or disguise illegally generated funds.
Money laundering is usually charged under two federal statutes, 18 U.S.C. §§ 1956 and 1957. As to Section 1956, the government commonly charges money laundering under a theory of concealment, which is criminalized in Section 1956(a)(1)(B)(i). A common defense to such an allegation is that the accused did not intend to disguise anything—let alone criminal activity—with the transaction. Conduct charged under Section 1957 involves financial transactions greater than $10,000 that constitute the proceeds of criminal activity. A common defense to this charge is that the government has incorrectly identified the source of the funds involved in the transaction, which it is required to do with precision. Forensic accounting experts and testimony from them is commonly relied upon by both the government and the defense when these crimes are charged.
Under the California Penal Code, defendants can be prosecuted for money laundering as a state criminal offense. Prosecutors must prove that more than $5,000 in a seven-day period or more than $25,000 in a 30-day period was laundered. They must also prove, beyond a reasonable doubt, that the defendant made the transactions with the intent to promote illegal activity or that the defendant knew the funds were the proceeds of illegal activity.
If convicted of federal money laundering, an individual may face fines of up to $500,000 or twice the value of the money laundered. They may also face prison time of up to twenty years.
Individuals who are convicted of money laundering under California state law also face significant penalties. If convicted of misdemeanor money laundering, a defendant may face up to a year in jail plus court fines.
A felony money laundering conviction under California law may result in up to three years of prison and fines of the greater of up to $250,000 or twice the amount of funds that were laundered.
Embezzlement is a crime defined as the misappropriation or theft of money or other property belonging to an individual’s employer or which an individual is holding in trust for another.
To prove embezzlement, the prosecution must prove three elements: (1) funds were entrusted to defendant, (2) defendant used the money fraudulently, and (3) the defendant intended to use the money for their own benefit or to deprive the owner of its use. Embezzlement is not the same as theft or conversion. Embezzlement is commonly charged when someone uses or transfers funds in a way that he or she is not authorized to do (even though he or she may have legitimate access to or control of the funds). An example would be a company accountant transferring company funds to his or her personal checking account. In contrast, theft or conversion is commonly charged when a person obtains control or possession of funds that he or she never had legitimate access to in the first place.
An individual convicted of embezzlement in California may face both fines and prison time. Potential penalties depend on whether an individual is convicted of misdemeanor embezzlement or felony embezzlement. Both the value of the property and specific facts of the case will determine whether the crime is classified as a misdemeanor or felony.
If convicted of misdemeanor embezzlement, a defendant may face summary probation, up to $1,000 in fines, and up to one year in jail. Felony embezzlement convictions carry potential sentences of formal probation, up to $10,000 in fines, and up to 3 years in prison.
If you have been accused of money laundering or embezzlement, or if you have been asked to answer questions in an investigation that may give rise to money laundering or embezzlement charges, it is important that you seek legal advice as soon as possible.
As former Assistant U.S. Attorneys, Patrick Delahunty and Will Edelman bring the perspective and experience of federal prosecutors who have obtained convictions against multiple defendants in money laundering and embezzlement cases in California. With experience on both sides of white-collar defense cases, our team is able to contribute a unique advantage when examining evidence in your case and developing a defense strategy. Our goal is to resolve these allegations as quickly as possible and fully exonerate our clients or substantially mitigate the charges against them.