As mentioned in my blog regarding Ocean County’s law enforcement’s aggressive use of the obscure “anti-drug profiteering” statute, local law enforcement is also using New Jersey’s obscure money laundering statute as means to leverage guilty pleas and property forfeiture. In New Jersey the offense commonly known as “money laundering” is codified under the term “financial facilitation.”
The use of the term “financial facilitation” instead of money laundering probably has something to do with the fact that New Jersey’s statute is so broad that it covers conduct having nothing to do with what is commonly understood to constitute “money laundering.” Under the statute, all that is required is the receiving of property (including money) that is known to be derived from criminal activity. It is not necessary to “launder” the money by disguising it as a legitimate business profit, i.e. depositing drug money cash along with cash earned through a legitimate money business like a restaurant or landscaping company. Nor is it necessary that ill-gotten money be deposited in a bank for the charge to apply.
The mere possession of property (including money) that is known to be derived from unlawful activity suffices for money laundering. While the possessing of ill-gotten property will often overlap with New Jersey’s receiving stolen property statute, the financial facilitation statute is even broader in scope and far more severe with regard to the potential penalties.
Note that just as the evidence needed to invoke the “anti-drug profiteering” penalties
is usually derived from very short investigations followed by a defendant’s statement to the police, the same goes for the evidence needed for a financial facilitation charge. And just like the “anti-drug profiteering penalties” are used to leverage guilty pleas and asset forfeitures, the same applies to the penalties for financial facilitation. Thus, it bears repeating that defendants should never waive their Miranda rights and never make statements to the police under any circumstances. Even if a high bail or jail used as a threat in order to induce a statement, it is far better to spend a few hours or even days in jail than it is to make a statement that will give law enforcement the evidence that they need to secure additional years in prison, along with significant financial penalties.
The following represent some of the key features of New Jersey’s financial facilitation statute and related case law. Sub-section (a) is the broad catch-all that will apply to most anyone that is arrested for selling drugs. The rest of the sub-sections appear to be nothing more than window-dressing to make the statute relate to the common definitions of money laundering. It gives the impression that sub-section season (a) snuck in to the legislation under the proverbial radar. Or, it was noticed by lawmakers but ignored as a means to avoid appearing “soft on crime”, a phrase we are bound to hear during this and every election season to come.
2C:21-25. Financial Facilitation of Criminal Activity, Crime. A person is guilty of a crime if the person:
- transports or possesses property known or which a reasonable person would believe to be derived from criminal activity; or
- engages in a transaction involving property known or which a reasonable person would believe to be derived from criminal activity
(1) with the intent to facilitate or promote the criminal activity; or
(2) knowing that the transaction is designed in whole or in part:
(a) to conceal or disguise the nature, location, source, ownership or control of the property derived from criminal activity; or
(b) to avoid a transaction reporting requirement under the laws of this State or any other state or of the United States ; or
- directs, organizes, finances, plans, manages, supervises, or controls the transportation of or transactions in property known or which a reasonable person would believe to be derived from criminal activity.
- For the purposes of this act, property is known to be derived from criminal activity if the person knows that the property involved represents proceeds from some form, though not necessarily which form, of criminal activity. Among the factors that the finder of fact may consider in determining that a transaction has been designed to avoid a transaction reporting requirement shall be whether the person, acting alone or with others, conducted one or more transactions in currency, in any amount, at one or more financial institutions, on one or more days, in any manner. The phrase “in any manner” includes the breaking down of a single sum of currency exceeding the transaction reporting requirement into smaller sums, including sums at or below the transaction reporting requirement, or the conduct of a transaction, or series of currency transactions, including transactions at or below the transaction reporting requirement. The transaction or transactions need not exceed the transaction reporting threshold at any single financial institution on any single day in order to demonstrate a violation of subparagraph (b) of paragraph (2) of subsection b. of this section.
- A person is guilty of a crime if, with the purpose to evade a transaction reporting requirement of this State or of 31 U.S.C. § 5311 et seq. or 31 C.F.R. § 103 et seq., or any rules or regulations adopted under those chapters and sections, he:
(1) causes or attempts to cause a financial institution, including a foreign or domestic money transmitter or an authorized delegate thereof, casino, check casher, person engaged in a trade or business or any other individual or entity required by State or federal law to file a report regarding currency transactions or suspicious transactions to fail to file a report; or
(2) causes or attempts to cause a financial institution, including a foreign or domestic money transmitter or an authorized delegate thereof, casino, check casher, person engaged in a trade or business or any other individual or entity required by State or federal law to file a report regarding currency transactions or suspicious transactions to file a report that contains a material omission or misstatement of fact; or
(3) structures or assists in structuring, or attempts to structure or assist in structuring any transaction with one or more financial institutions, including foreign or domestic money transmitters or an authorized delegate thereof, casinos, check cashers, persons engaged in a trade or business or any other individuals or entities required by State or federal law to file a report regarding currency transactions or suspicious transactions. “Structure” or “structuring” means that a person, acting alone, or in conjunction with, or on behalf of, other persons, conducts or attempts to conduct one or more transactions in currency, in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading currency transaction reporting requirements provided by State or federal law. “In any manner” includes, but is not limited to, the breaking down into smaller sums of a single sum of currency meeting or exceeding that which is necessary to trigger a currency reporting requirement or the conduct of a transaction, or series of currency transactions, at or below the reporting requirement. The transaction or transactions need not exceed the reporting threshold at any single financial institution on any single day in order to meet the definition of “structure” or “structuring” provided in this paragraph.
2C:21-26. Knowledge Inferred. For the purposes of section 3 of this act, the requisite knowledge may be inferred where the property is transported or possessed in a fashion inconsistent with the ordinary or usual means of transportation or possession of such property and where the property is discovered in the absence of any documentation or other indicia of legitimate origin or right to such property.
2C:21-27. Degrees of Offense; Penalties; Nonmerger. a. The offense defined in subsections a. b. and c. of section 3 of P.L.1994, c.121 (C.2C:21-25) constitutes a crime of the first degree if the amount involved is $500,000.00 or more. If the amount involved is at least $75,000.00 but less than $500,000.00 the offense constitutes a crime of the second degree; otherwise, the offense constitutes a crime of the third degree. The offense defined in subsection e. of section 3 of P.L.1994, c.121 (C.2C:21-25) constitutes a crime of the third degree. Notwithstanding the provisions of N.J.S.2C:43-3, the court may also impose a fine up to $500,000.00. The amount involved in a prosecution for violation of this section shall be determined by the trier of fact. Amounts involved in transactions conducted pursuant to one scheme or course of conduct may be aggregated in determining the degree of the offense.
Money laundering is a continuing offense for the purpose of statute of limitations when the defendant’s successive actions constitute a common scheme to defraud. State v. Diorio, 216 N.J. 598, 625 (2014). See the discussion in Comment 5 on 2C:1-6. This provision adds to the broad scope and applicability of the statute. For example, a very low level marijuana dealer who sells a gram at a time can be arrested for a minor fourth degree distribution. But if he makes a statement to the police in which he admits to having sold very small amounts intermittently over the past twenty years, the state can use that statement as proof that the defendant has earned $75,000 over the course of their lifetime through criminal activity. That $75,00 threshold to support a second degree money laundering charge even though the underlying criminal conduct for which the defendant was arrested would only be a fourth degree offense. Probation is the likely outcome for the fourth degree offense. Five to ten years in prison and a quarter of a million dollar fine is the likely outcome for the second degree offense.
Section 2C:21-27 grades the crime, provides that it does not merge with any other crime and increases the usual fines. The other two sections establish civil remedies. The money laundering sections were amended by L. 1999, c. 25 as follows: 2C:21-25d was amended by the addition of the factors the finder of fact may consider; 2C:21-27a was amended to create the first degree crime and to make explicit the second degree crime, to permit the $500,000 fine and to require a minimum term for the first degree crime; 2C:21-27c was amended to provide for consecutive sentences; 2C:21-27.1 through 2C:21-27.6 were adopted to provide for money laundering profiteering penalties. The penalty statutes provide for: a half million dollar penalty for first degree money laundering, i.e. “laundering” a half million dollars or more”, a quarter of a million dollar penalty for second degree “laundering” of seventy-five thousand dollars or more” and a $75,000 penalty for any amount of “laundering”.
Section 2C:21-25 was amended by L. 2002, c. 26, §14 in conjunction with the adoption of Chapter 38, Anti-Terrorism, by the addition of subsection e. Section 2C:21-27a was also then amended to provide that the crime established by 2C:21-25e be graded as a third degree crime.