Money Laundering in California - Penal Code 186.10 PC
California Penal Code 186.10 PC defines the serious crime of money laundering. This offense involves taking money obtained from illegal or criminal activity and then channeling it into bank accounts or other legitimate uses so that the source of the funds is untraceable.
Money laundering is a wobbler that can be prosecuted as a misdemeanor or a felony.
The act of money laundering is frequently prosecuted as a federal crime, especially when the money crosses state lines or involves financial institutions insured by the federal government.
However, the State of California also has a statute criminalizing money laundering. Under Penal Code 186.10 PC, if you are convicted of money laundering, you could face up to 5 years in prison, a significant penalty that underscores the seriousness of this crime, depending on the total amount of money transacted.
PC 186.10 says, "(a) Any person who conducts or attempts to conduct a transaction or more than one transaction within seven days involving a monetary instrument or instruments of a total value exceeding five thousand dollars ($5,000), or a total value exceeding twenty-five thousand dollars ($25,000) within 30 days, through one or more financial institutions (1) with the specific intent to promote, manage, establish, carry on, or facilitate the promotion, management, establishment, or carrying on of any criminal activity, or (2) knowing that the monetary instrument represents the proceeds of, or is derived directly or indirectly from the proceeds of, criminal activity, is guilty of the crime of money laundering."
What Constitutes Money Laundering in California?
As noted, California Penal Code 186.10 PC defines money laundering as the act of conducting or attempting to conduct a transaction through a financial institution with the knowledge that the funds involved are derived from illegal activities or for the purpose of promoting and furthering such activities.
Essentially, money laundering involves taking "dirty money" obtained through criminal means and attempting to "clean" it by running it through a financial institution to make it appear legitimate.
Under California law, the "tripwire" for a money laundering crime is when the money obtained through criminal activity is processed in some way through a financial institution.
Under PC 186.10, money laundering occurs when a person conducts or attempts to conduct a financial transaction, or multiple transactions, within a specific timeframe exceeding the following threshold values:
- More than $5,000 within seven days.
- More than $25,000 within 30 days.
What Must Be Proven to Convict?
To secure a conviction for money laundering under Penal Code 186.10, the district attorney (prosecution) must prove several key elements of the crime beyond a reasonable doubt. These elements are the building blocks of the crime and include:
- Completion of a Financial Transaction: The prosecution must demonstrate that you were involved in one or more financial transactions. This could be as simple as depositing money into a bank account or as complex as transferring funds between accounts to obscure their origins.
- Involvement of Criminal Proceeds: The money involved in the transaction must be proven to come from illegal activities. This could involve evidence linking the funds to drug sales, fraud, theft, or other criminal enterprises.
- Knowledge of the Money's Origin: Prosecutors must show that you knew the money involved in the transaction was derived from illegal activity. Proving knowledge can be challenging, as it often requires circumstantial evidence, such as the defendant's actions or statements indicating awareness.
- Intent to Facilitate Criminal Activity or Conceal the Source: Finally, the prosecution must establish you acted with intent either to facilitate further criminal conduct or to conceal the illegal origin of the funds. This 'intent' refers to your state of mind at the time of the transaction, and it can be proven through your actions or statements indicating awareness of the illegal origin of the funds.
What are Related Crimes?
- Penal Code 186.11 PC - Freeze and seize penalty enhancement. This enhancement says that you will face an additional consecutive state prison term of one to five years if you are convicted of two or more fraud or embezzlement-related felonies in a single case and the crimes involve the taking of over $100,000.
- Health and Safety Code 11370.9 HS - Laundering drug money. This law makes it a crime to launder the proceeds of an unlawful drug sale or drug trafficking. Laundering money under this law occurs in the same manner as laundering under PC 186.10. A common defense is to show that you did not act with criminal intent.
- 18 U.S.C. 1956 and 1955 - Federal money laundering. The federal crime of money laundering occurs when you transfer money from criminal activity into legitimate channels and attempt to disguise the illegal source of the funds. You can be found guilty under this federal law if you know that the money involved in a financial transaction came from the proceeds of unlawful activity or conduct a financial transaction involving money from unlawful activity. This law prohibits all types of money laundering schemes, including tax evasion and funding terrorists. A violation of this law carries up to 20 years in federal prison.
What are the Penalties for Money Laundering?
Money laundering is a "wobbler" offense in California, meaning it may be prosecuted either as a misdemeanor or a felony, depending on the circumstances of the case and the defendant's criminal history. This decision largely hinges on factors such as the amount of money involved, your prior criminal history, etc.
Misdemeanor Money Laundering
If you're convicted of a misdemeanor violation of PC 186.10, you could face:
- Fines of up to $1000, and
- Up to one year in county jail.
Felony Money Laundering
If the offense is charged as a felony, the potential penalties can be much greater and will depend on your prior history and the amount of money transacted. If convicted, you could face:
- Fines: For a first offense, you can face up to $250,000 or twice the value of the property transacted, whichever is greater. For subsequent convictions, the fines can increase to $500,000 or five times the value of the property transacted.
- Imprisonment: You may face incarceration of up to 4 years.
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Additional Terms: Additional terms of imprisonment can be imposed based on the total value of the transactions:
- $50,000 to $150,000: An extra year in prison.
- $150,000 to $1,000,000: An extra two years.
- $1,000,000 to $2,500,000: An extra three years.
- Over $2,500,000: An extra four years.
Under PC 1170(h) (commonly referred to as California's realignment program), your sentence may be served in county jail rather than in state prison.
However, we should also note that PC 186.10(b) also permits multiple transactions to be charged as separate offenses. This means that you could face multiple counts of money laundering and face compounded sentencing for each.
What Are the Common PC 186.10 Defenses?
Facing money laundering charges can be frightening, but an experienced California criminal defense attorney can still employ certain defenses to counter these charges. Examples of common defenses include:
- Lack of Knowledge: If your attorney can demonstrate that you reasonably believed the funds were legitimate or you had no knowledge of their criminal origins, the prosecution may struggle to meet the burden of proof required for a conviction.
- No Criminal Activity: Your attorney may argue (with evidence) that the money involved in the questionable transactions did not derive from illegal activities.
- Entrapment: In some cases, law enforcement may engage in entrapment, coercing an individual into committing a crime they would not have otherwise committed. If you can provide proof that this happened, this defense could result in a not-guilty verdict.
- Violation of Constitutional Rights: Any violation of your constitutional rights during the investigation or arrest, such as unlawful search and seizure, can result in the evidence being deemed inadmissible.
For additional information, contact our criminal defense law firm, Eisner Gorin LLP in Los Angeles, CA.
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