Fraud Enforcement and Recovery Act of 2009 Expands Fraud and Money Laundering Statutes

In a previous post we discussed the federal statutes on money laundering, why they can prove complicated for criminal defense lawyers in defending cases, and how much broader they are than most people think, affecting even white collar cases. Last week President Obama signed the Fraud Enforcement and Recovery Act of 2009 (FERA) into law, expanding the money laundering statutes (and many fraud statutes) even further.

In our post linked above, we mentioned that used car dealerships are “financial institutions” under the federal criminal code’s definition, even though most people would never consider them to qualify as such. FERA expands the definition even further, including even businesses that are not directly regulated or insured by the federal government.

FERA also expands the money laundering statutes by reacting to a significant Supreme Court case that was decided last year. In United States v. Santos, the Court held that the word “proceeds” in the money laundering statutes referred only to profits obtained from illegal activity, rather than all money brought in, or the “gross receipts.” FERA overrules that part of the Court’s decision by defining “proceeds” as “any property derived from or obtained or retained, directly or indirectly, through some form of unlawful activity, including the gross receipts of such activity.”

FERA expands the government’s ability to prosecute fraud in a number of ways in addition to those enumerated above. Financially, it authorizes over $500 million in additional funding for the DOJ, SEC, USAO, FBI, U.S. Postal Inspector, and Secret Service. It also amends fraud statutes to punish significantly more broad behavior, enlarging the mortgage applications statute, major fraud statute, and securities statute, and significantly expanding the civil, but punitive, False Claims Act. FERA will have an important impact on white collar criminal law.

Professor Pogdor gives a more detailed analysis of FERA’s impact on the money laundering provisions over at the White Collar Crime Prof Blog.