3d Circuit Upholds federal money laundering sentence of lawyer on grounds of Wilful Blindness

The White Collar Crime Pro Blog Link published a post on Sunday about the Third Circuit's recent opinion upholding the 32 month sentence of an attorney convicted of conspiracy to commit money laundering, money laundering, and conspiracy to structure a currency transaction. The opinion was analyzed in the ABA's eJournal Report here.

According to the opinion, the attorney, Luis Flores, was paid $2,000/week in cash to oversee various bank accounts into which he made numerous cash deposits on behalf of his client (activity which led one bank to close the client's account on suspicion of money laundering). Further, an accountant obtained by Flores to balance the client's books told the attorney that he should be concerned because large payments were being made to European companies that had no apparent relation to the client's alleged import-export business. Flores also incorporated nine companies on behalf of his client.

Flores had argued that his client deceived him about the nature of his business activities. However, the Third Circuit rejected that defense finding that the government proved beyond a reasonable doubt that Flores was "willfully blind" to his client’s alleged money-laundering activities.

Southern District of New York Court Denies Motion to Sever Trials on Gambling and Money Laundering Conspiracies

Various defendants, including organized crime figures, were indicted for conspiracy to operate an illegal gambling business, conspiracy to receive and dispose of stolen merchandise, and a money-laundering conspiracy. Various defendants moved the U.S. District Court for the Southern District of New York for, among other items relief, a trial severance. Although the court deemed the gambling and money-laundering conspiracies separate, it denied severance under Federal Rule of Criminal Procedure 14 after concluding that the movants failed to show a serious risk that joint trial would compromise a specific trial right or prevent the jury from making a reliable judgment as to guilt. The decision, issued on July 21, 2006 in the case of United States v. Nicholas Michael Gruttadauria, is available online at http://www.nylj.com.

Southern District of New York Court Denies Petition for Possession of Diamonds Forfeited Upon Money Laundering Conviction

In a high profile case, defendant Roman Nektalov, a diamond dealer on 47th Street, was convicted in July 2004 of one count of money laundering. On November 3, 2004, the U.S. District Court for the Southern District of New York entered a preliminary order of forfeiture providing that defendant's right, title, and interest in certain diamonds seized during defendant's arrest be forfeited to the United States.

On November 19 and 29, 2004, respectively, nonparties E.J.D. Diamonds Manufacturer ("EJD") and Sergey Diamonds ("Sergey") petitioned the Court, pursuant to Federal Rule of Criminal Procedure 32.2(c), for an ancillary proceeding at which they would seek to demonstrate that they were the true owners of the diamonds, that the diamonds were only in Nektalov's possession on consignment, and that the forfeited diamonds should be returned to them. The Court conducted an ancillary proceeding on January 10 and 11, 2006. After reviewing the evidence and the parties' post-hearing submissions, the Court denied EJD's and Sergey's petitions for the reasons set forth in a decision issued on July 20, 2006 in the case of United States v. Roman Nektalov. The decision is available online at http://www.nylj.com.