Money laundering and embezzlement are two of the most commonly investigated and charged “white collar” offenses. 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 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.
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. 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.
The government rarely charges these crimes without conducting a forensic accounting. Typically, this is done by a government CPA who traces the flow of funds from or through all of the relevant bank accounts. The resulting analysis will be the central part of the government’s case in chief.
A successful defense will likely depend on rebutting the government’s financial analysis. As a result, your defense team should be familiar with reviewing such records and how to work with forensic accountants. In our experience, many defense lawyers overlook this or assume that they will be able to do so. But you should have confidence that your legal team does.
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.