By Jonny Lupsha, Wondrium Staff Writer
In an ironic twist, a corruption expert has been sentenced for money laundering. Former University of Miami professor Bruce Bagley received six months for laundering $2.5 million and keeping a commission of $192,000. Money laundering makes illicit funds look legitimate.
Professor Bruce Bagley taught international studies at University of Miami and authored several books on corruption in Latin America. He also pleaded guilty in June 2020 to two counts of money laundering for taking part in a criminal operation that ran through Venezuela. Bagley, 75, received six months in prison from Judge Jed Rakoff, a U.S. District Court judge in Manhattan.
Criminal enterprises that are financially successful often have to make up a source for their gains. In his video series White Collar Criminal Law Explained, Professor Randall D. Eliason, Professorial Lecturer in Law at The George Washington University Law School, explained the main statutes of money laundering.
Walter White and Classic Money Laundering
If you run a successful criminal enterprise, you can’t simply walk into a bank with $100,000 cash and say you’d like to make a deposit. It raises suspicions. Yet drug kingpins and mafiosos obviously make more money than they could spend without explanation. How do they get dirty money into the bank?
“Classic money laundering involves concealing the existence, nature, or source of illicit funds so the funds will appear legitimate if discovered,” Professor Eliason said. “The money launderer seeks to clean up—or launder—criminal proceeds so that, when the money is spent, no one will ask where it came from. One common way to do this is to run the criminal funds through the accounts of what appears to be a legitimate business.”
In AMC’s popular drama Breaking Bad, chemistry teacher Walter White, who is dying of cancer, turns to making the drug crystal meth. He initially does this so he can pay his medical bills and secure his family a future, though eventually he takes to it like a duck to water. Professor Eliason noted that in the show, White and his wife buy a car wash and pad its actual earnings with drug money so the money appears legitimate. They can then pocket this money as salaries and bonuses. Criminals often do similar versions of this scheme.
Domestic Money Laundering in the Courtroom
The primary domestic money laundering statute is Statute 18, United States Code, Section 1956(a)(1), usually written as 18 U.S.C. § 1956(a)(1). In domestic money laundering cases, prosecutors must show that the criminal statute against money laundering was broken by a defendant.
“Prosecutors have to prove four elements beyond a reasonable doubt: The defendant conducted or attempted to conduct a financial transaction; the defendant knew at the time that the transaction involved the proceeds of some form of unlawful activity; the transaction did in fact involve the proceeds of a specified unlawful activity; and the defendant acted with one of four types of intent or knowledge,” Professor Eliason said.
In order to understand Professor Bagley’s international money laundering case, it’s important to first understand how classic domestic money laundering works. Both have considerable overlap. In fact, the section of the criminal code immediately following domestic laundering involves laundering money across the U.S. border, or internationally. It’s Section 1956(a)(2).
According to Professor Eliason, international money laundering has three elements. First, the defendant must have transported, transmitted, or transferred monetary instruments or funds across the U.S. border, or attempted to do so. Second, they did so with the intent to promote the carrying on of a specified unlawful activity.
Or third, they did so with the knowledge that the proceeds of some form of unlawful activity—and that moving the funds was designed, at least partially, either to conceal or disguise the money’s origins or to avoid filing a Currency Transaction Report.
International money laundering is Professor Bagley’s first offense.