Readers of the FCPA Blog know that money-laundering conspiracy charges are often part of white collar prosecutions. That’s because it’s hard to commit most other white collar crimes without also committing money laundering.
On Tuesday, the DOJ brought a superseding indictment against 16 parents involved in the college admissions scandal who hadn’t already pleaded guilty to bribery. The 16 were additionally charged with conspiring to commit fraud and money laundering.
For the DOJ, money-laundering conspiracy charges are extra potent. The federal anti-money laundering law —18 U.S.C. §1956 — packs a wallop, with a fine of a half million dollars or more and up to 20 years in prison. A money-laundering conspiracy conviction carries the same penalties and is even easier to prove.
The feds themselves know the power of money-laundering charges in cases like the college cheating scandal. The prosecutors’ handbook (known previously as the U.S. Attorneys Manual and now called the Justice Manual) says, “A conviction for money laundering may result in a much more severe sentence than a conviction based solely upon a mail or wire fraud.”
The conspiracy section of the federal money-laundering statute is uncomplicated. 18 U.S.C. §1956(h) — a basis for this week’s superseding indictment — says,
Any person who conspires to commit any offense defined in this section . . . shall be subject to the same penalties as those prescribed for the offense the commission of which was the object of the conspiracy.
Proving a federal money-laundering conspiracy isn’t difficult. In connection with a fraud count, prosecutors only need to show that a defendant, working with someone else, was “trying to conceal or disguise the nature, location, source, ownership, or control of the proceeds of unlawful activity.”
In the superseding indictment against the 16 parents this week, the DOJ made specific allegations against Lori Loughlin and her husband Mossimo Giannulli to support the money-laundering conspiracy count.
Loughlin and Gianulli . . .
. . . also conspired with others known and unknown to the Grand Jury to conceal their fraud scheme by funneling bribe and other payments through the façade of The Key or KWF, including via payments to and from accounts in the District of Massachusetts, and to promote their fraud scheme via payments to The Key and KWF from outside the United States.
KWF is the non-profit corporation the defendants allegedly funnelled the bribes to. The Key is the for-profit company set up by the scheme’s mastermind, William “Rick” Singer.
Singer pleaded guilty last month to charges of racketeering conspiracy, money laundering conspiracy, conspiracy to defraud the United States, and obstruction of justice. Thirteen parents, including actress Felicity Huffman, agreed to plead guilty this week to one count of conspiracy to commit mail fraud and honest services mail fraud.
The federal jury instruction for money-laundering conspiracy is surprisingly simple and starts by explaining what prosecutors don’t need to prove. That alone should alarm a defendant.
The instruction says in part:
The evidence in the case need not show that the alleged members of the conspiracy entered into any express or formal agreement, or that they directly stated between themselves the details of the scheme and its object or purpose, or the precise means by which the object or purpose was to be accomplished. Similarly, the evidence in the case need not establish that all of the means or methods which were agreed upon were actually used or put into operation. Nor must the evidence prove that all of the persons charged were members of the conspiracy.
In your consideration of the conspiracy offenses alleged in Count(s)___ of the Indictment, you should first determine, from all the evidence and testimony, whether or not a conspiracy existed at all. If you conclude that a conspiracy did exist as alleged, you should next determine whether or not each defendant knowingly or intentionally became a member of the conspiracy.
The superseding indictment in the college cheating case alleges that in April 2017 Loughlin’s husband wired $200,000 to KWF in exchange for Singer “facilitating his older daughter’s admission to USC” as a purported crew recruit. In February 2018, the husband again wired $200,000 to KWF in exchange for Singer “facilitating his younger daughter’s admission to USC” as a purported crew recruit. Neither daughter actually did crew.
Then in February and March 2018, KWF issued two letters to Loughlin and her husband “falsely indicating that ‘no goods or services were exchanged’ for the purported donations of $200,000,” according to the new charges in the indictment.
The DOJ will presumably use Singer’s testimony, bank records, and the recorded calls between Singer and Loughlin to try to prove those few essential facts to the jury.
Until then, of course, Loughlin and all of the defendants who haven’t pleaded guilty are presumed innocent.
Richard L. Cassin is editor at large of the FCPA Blog.