Down South Carolina way, Bobby Frederick writes about another lawyer lost to the smurfing gods.
Not reporting payments of greater than $10,000 is a sure way to bring the attention of the federal government to your law practice – one purpose of the requirement to report large payments is to prevent money laundering, there is no good reason to not report unless there is something to hide, and breaking money up into smaller amounts to avoid reporting is a separate crime called structuring.
No idea if this is how attention came to Attorney Brian Young in Virginia, but he has been disbarred and was sentenced to two and a half years in prison after pleading guilty in federal court to conspiracy to commit money laundering. Just a guess, but I think his clients and others involved in the scheme probably received a significant time cut for debriefing and offering to testify about Young’s activities.
My old pal “Don’t Worry” Murray sat me down in a deli in the Bronx many years ago and explained that lawyers should never do wrong and expect a client to cover. “They’ll always drop a dime before doing one,” Murray told me. He always had something colorfully pithy to say.
Structuring is the official name for smurfing, breaking up large amounts of cash into smaller amounts that fly under the reporting requirement. It’s illegal. Bobby explains that “there is no good reason to not report unless there is something to hide.” I assume that Bobby is relating the government’s official view, because no criminal defense lawyer takes this position. It’s been so since my old suitemates from the 80s, Paul Goldberger and Larry Dubin, argued that while they had no problem disclosing the receipt of cash fees, disclosing the source of the fees was a big problem.
The problem is that criminal defense lawyers sometimes represent, well, criminals. Of course, they’re entitled to representation too, and their right to counsel (and counsel of choice) directly relates to their ability to retain a lawyer. If the payment of a fee in cash (because some criminals engage in cash transactions. No really, they do.) , then disclosing this in Form 8300 to the government tends to compromise their right to counsel or their right not to bear witness against themselves. You see, the fact that they have a bundle of cash to pay for lawyers is frowned upon by the government. So when the lawyers fill out the forms and names names, they’re giving up their own clients. Something has to give.
To avoid disclosure under section 6050-I, they need only pay counsel in some other manner than with cash. The choice is theirs. None of the appellants has advanced a legitimate reason why payment other than in cash cannot be made. Statements such as “[s]ome clients may not have non-cash assets” are somewhat less than persuasive. Equally unpersuasive is the argument that a would-be client might elect to take his business to an unscrupulous lawyer who would ignore the reporting requirements of section 6050-I. Although the unscrupulous lawyer might not be the client’s first choice, the Sixth Amendment does not guarantee the client the right to his first choice.
Easy, right? Since no one has a right to be a criminal, and earn criminal proceeds, and use those proceeds to hire lawyers to defend them against charges of being a criminal, no harm, no foul. That there are legitimate reasons why people have and use cash, or that the rights afforded by the Constitution might trump the government’s desire to compel lawyers to give up their cash paying, criminal accused clients, because it’s a really great way to ferret out criminal proceeds while simultaneously denying them access to lawyers to defend themselves, is of little concern.
Regardless, the 2d Circuit’s decision was in 1991, eons ago. It’s long settled that the identities of clients who pay lawyers more than $10,000 in cash (or cash equivalents) must be disclosed. And it’s long settled that you can’t avoid the requirement by smurfing the cash. And it’s long settled that criminal defense lawyer incomes suffered greatly because of this, as did the quality of drug dealer defense, which (along with the draconian sentencing guidelines) precipitated a mad rush to the United States Attorney’s office to cooperate. Ah, good times.
Bad as this scenario may be, for the good of the country and our revenue stream, not to mention legitimate cash payers whose funds would be seized for forfeiture within a few days of Form 8300 being filed to make sure they couldn’t defend themselves and get convicted, thus proving they were criminals after all and justifying the prior seizures, this is the world in which we operate. These rules may suck, but they’re the rules of our game. Play be them.
Criminal defense lawyers are peculiarly situated to be sucked into bad things. Whether we engage in them or suffer by mere proximity, the smell of the criminals around us tends to stay with us. If a prosecutor gets a whiff, they will take enormous pleasure in bringing us down. Without us, their job would be so much easier, and many find it impossible to believe that we serve a purpose other than enabling the downfall of society to the hands of criminals. Yes, we are very much the problem.
Stay clean. Stay extra clean. We may defend criminals (along with the occasional innocent), but we are not criminals. We cannot be criminals. We cannot come anywhere near being criminals unless we want to share a cell with them.
We are targets at all times. The other team may, intellectually, realize that we’re a necessary part of the system, and they may not hate us individually, but as a group, they despise us. They can’t help it, as we make their lives unhappy, especially if we do our job right. Few things make a prosecutor drool more than a dirty criminal defense lawyer. And by dirty, I mean bearing any whiff of wrongdoing.
It’s not easy. Temptation is around us all the time. Even things that are perfectly lawful, completely proper, can give rise of the appearance of involvement in a conspiracy. Our proper duties bear the faint odor of enabling, and our zealous representation reeks of it.
As Bobby says, few things will get us in trouble faster than messing with money, which really sucks since most of us need to make money to pay for stuff. You just can’t make it illegally. Remember what “Don’t Worry” Murray said. He knows.