Judge Opens a ‘Window’ in Money-Laundering Case

A federal appellate decision last week that undermined the government’s major weapon against money launderers has a “large time window” in which such criminals can still be prosecuted, a Los Angeles judge ruled Friday.

U.S. District Judge William D. Keller said the appellate ruling, which overturned the convictions in Arizona of four people accused of money-laundering acts in 1982, could not be retroactive to a two-year period when such prosecutions were repeatedly upheld in the courts.

The judge’s decision, prosecutors and defense attorneys said, clouds the effect of last week’s ruling by the U.S. 9th Circuit Court of Appeals.

Deposits Under $10,000

In the Arizona case, the appellate judges found that a financial institution’s customers are not required to report deposits under $10,000, even if the purpose of their transactions was to evade the law and move money out of the country without a trace.

Federal prosecutors said that ruling threatened government cases based on the federal Bank Secrecy Act, which requires that cash transactions of $10,000 or more be reported to the Internal Revenue Service. The law has been extensively used by federal authorities to go after drug traffickers trying to launder their profits.

Those fears were heightened earlier this week when U.S. District Judge Consuelo B. Marshall, relying on the appellate decision, dismissed 19 money-laundering counts against eight defendants.

Different Direction

But Keller, in his decision, went in a different direction, ruling that the 9th Circuit opinion and a similar one issued last July by the U.S. 1st Circuit Court of Appeals, could not be used retroactively to absolve criminal money-laundering acts committed before the opinions were issued.

The judge’s ruling came in the case of a West Covina man, Frank Joseph Vecer, 51, who was sentenced to seven years in prison after he pleaded guilty last October to laundering $290,000 in suspected drug profits.

Defense attorney Richard C. Chier said he would appeal Keller’s decision to the 9th Circuit, pointing out that the defendants in the case before Marshall were also accused of acts committed before the two appellate decisions were issued.

“I can’t reconcile the two opinions (by Marshall and Keller),” he said. “Reasonable minds can disagree.”