Money Laundering Charge Against Criminal Defense Attorney Argued in Federal Appellate Court

Last month the Eleventh Circuit Court of Appeals heard oral arguments in U.S. v. Velez, a federal criminal case in which the lower court dismissed a money laundering charge based upon payments of legal fees. The Eleventh Circuit sits here in Atlanta, but also hears oral arguments in Montgomery, Alabama, and Jacksonville and Miami, Florida. The judges’ questions showed skepticism of the prosecution’s arguments.

The case revolves around a defendant’s payment of legal fees to his criminal defense team, including Roy Black. Fabio Ochoa-Vasquez was extradited to the U.S. in 2001 to face charges of conspiracy to smuggle cocaine. His defense team hired Ben Keuhne, a well-respected attorney in South Florida, to investigate the source of the money Ochoa would use to pay fees and to verify that it was not criminally derived property. Kuehne was assisted by Gloria Velez, a CPA in Colombia, and Oscar Saldarriaga Ochoa, a Colombian attorney. Velez, Kuehne, and Saldarriaga are the defendants in the case.

Kuehne’s trust account received wire transfers totaling more than 5 million dollars from various bank accounts. Kuehne drafted six opinion letters advising the criminal defense team that he had analyzed the sources of all funds. Immediately after each of the first four opinion letters, a wire transfer was made to the criminal defense team, totaling the amount sent to Kuehne’s trust account minus $50,000, which the court assumed to be Kuehne’s retainer.

Count One of the indictment charged the defendants with money laundering in violation of 18 U.S.C. § 1957, despite § 1957(f)(1), which provides an exception for “any transaction necessary to preserve a person’s right to representation as guaranteed by the sixth amendment to the Constitution.” Because the funds were used to pay the criminal defense team, the district court judge dismissed Count One. The district court’s order is available here. The government appealed the dismissal to the Eleventh Circuit.

At oral arguments on September 23, the judges questioned the government’s attorney aggressively with questions on the exception. At one point, a judge commented “Oh come on.” The mood shifted considerably when Kuehne’s lawyer began. He argued that legal fees that are criminally derived property may be seized, but lawyers cannot lose their liberty. Allowing that result would cause a chilling effect, which Congress tried to remove by including the exception. Another judge even cracked a joke when Congress’s public policy choices were raised.

For more information on this case, visit the Southern District of Florida Blog, by David Oscar Markus. He wrote an amicus brief on behalf of the National Association of Criminal Defense Lawyers on this issue. He also has blogged on the many other problems the prosecution has encountered with this case.