Conspiracy in violation of 18 U.S. C. Section 371 is frequently charged in criminal securities fraud and other white collar cases. The crux of the statute is its prohibition of an agreement to do an illegal act.

Judge Berman’s Order is not a ruling upon the ultimate merits of either party’s claims. It does, however, illustrate that a judge in the influential Southern District of New York is willing to consider criminal sanctions penalties for alleged deceitful acts of a foreign national made primarily outside of the United States which target and involve the U.S. banking system.I. Conspiracy to defraud the United States and to impede the lawful functions of the United States Department of Treasury, Office of Foreign Assets Control (“OFAC”) in violation of 18 U.S.C. § 371.The first sanctions charge leveled against Mr. Zarrab alleged that he and his associates engaged in what is commonly referred to as a “Klein conspiracy;” they conspired to defraud the United States and to impede the lawful functions of OFAC in violation of 18 U.S.C. § 371. Judge Berman found that the prosecution proved the elements of a Klein conspiracy, which are “(1) that the defendant entered into an agreement (2) to obstruct a lawful function of the Government (3) by deceitful or dishonest means and (4) at least one overt act in furtherance of the conspiracy.” United States v. Ballistrea, 101 F.3d 827, 832 (2d Cir. 1996).

Judge Berman’s Order is not a ruling upon the ultimate merits of either party’s claims. It does, however, illustrate that a judge in the influential Southern District of New York is willing to consider criminal sanctions penalties for alleged deceitful acts of a foreign national made primarily outside of the United States which target and involve the U.S. banking system.I. Conspiracy to defraud the United States and to impede the lawful functions of the United States Department of Treasury, Office of Foreign Assets Control (“OFAC”) in violation of 18 U.S.C. § 371.The first sanctions charge leveled against Mr. Zarrab alleged that he and his associates engaged in what is commonly referred to as a “Klein conspiracy;” they conspired to defraud the United States and to impede the lawful functions of OFAC in violation of 18 U.S.C. § 371. Judge Berman found that the prosecution proved the elements of a Klein conspiracy, which are “(1) that the defendant entered into an agreement (2) to obstruct a lawful function of the Government (3) by deceitful or dishonest means and (4) at least one overt act in furtherance of the conspiracy.” United States v. Ballistrea, 101 F.3d 827, 832 (2d Cir. 1996).

e/willful blindness theory of prosecution, which is often critical in cases involving third-party professionals such as lawyers, accountants, and real estate agents. But, more importantly, it involves a discussion of when defense attorneys may accept illegally-obtained proceeds from their clients as payment for legal representation, and if such funds ever may be provided through third parties. As we will discuss, the Fourth Circuit interpreted very narrowly a “safe harbor” provision under 18 U.S.C. § 1957(f) for defense attorneys – and did so in a case in which the evidence, if accepted, made clear that the safe harbor did not apply. Stated otherwise, bad facts may have resulted in inappropriately broad language applicable to other cases.As we just blogged, the U.S. Attorney’s Office for the Southern District of New York also announced on April 25 that Robert Wise (“Wise”), a New York attorney, had pled guilty to a single count of conspiring to commit money laundering, in violation of 18 U.S.C. § 371. This case arose out of the indictment of Vladimir Voronchenko, who has been charged in connection with a scheme to make payments to maintain multiple properties in New York and Florida owned by his friend and associate, sanctioned Russian oligarch Viktor Vekselberg. These two cases are very different. But they both illustrate how attorneys – either business attorneys, or criminal defense attorneys – can get caught up in the problems of their own clients, particularly given the ability of the government to pursue a theory of willful blindness.The Ravenell FactsAccording to the Opinion, “[t]he government put forth evidence at trial attempting to show that Ravenell, a criminal defense attorney, used his position as a partner at his law firm . . . to laundering money in tandem with the illegal drug activities of his clients [between 2009 and 2017].” Most of the evidence at trial focused on a marijuana distribution organization led by an individual named Richard Byrd (“Byrd”), who had kno

First of Two Blog Posts in a Series Pertaining to Attorneys Convicted of Money LaunderingIn February, we blogged on the indictment of Vladimir Voronchenko (“Voronchenko”) in the Southern District of New York (“SDNY”), who was charged in connection with a scheme to make payments to maintain multiple properties in New York and Florida owned by his friend and associate, sanctioned Russian oligarch Viktor Vekselberg (“Vekselberg”). The February indictment also contained allegations that Voronchenko had retained a then unnamed U.S.-based attorney to help carry out those alleged money laundering activities.On April 25, the U.S. Attorney’s Office for the SDNY announced that Robert Wise (“Wise”), a New York attorney, had pled guilty to a single count of conspiring to commit money laundering, in violation of 18 U.S.C. § 371. The substantive offense that was the object of the conspiracy was 18 U.S.C. § 1956(a)(2)(A), which criminalizes the act of transferring monetary instruments or funds into or outside of the United States with the intent to promote the carrying on of specified unlawful activity. Interestingly, the superseding information charges Wise with violating the general criminal conspiracy statute, Section 371 (which carries a statutory maximum sentence of “only” five years), rather than violating the specific money laundering conspiracy provision, 18 U.S.C. § 1956(h) (which carries a statutory maximum sentence of 20 years). It is unclear whether Wise is cooperating with investigators.In our next post, we will discuss the Fourth Circuit’s affirmation of attorney Kenneth Ravenell’s conviction at trial for money laundering conspiracy, in violation of Section 1956(h).Alleged Evasion of SanctionsThe charge against Wise identifies the specified unlawful activity as a violation of the International Em

Blaszczak I and remanded the case for further consideration in light of Kelly.Blaszczak IIThe Government’s PositionOn remand, the U.S. Attorney’s Office for the Southern District of New York explained that it was constrained to confess error at the direction of the Solicitor General’s Office and conceded that the Department of Justice’s position was that CMS’s confidential information on proposed changes to reimbursement rates did not qualify as “property,” “money” or “a thing of value” for the purposes of Title 18. The government requested that the case be remanded to the district court so that it could dismiss the substantive fraud and conversion counts. With respect to the conspiracy convictions, the government took the position that those convictions should be affirmed because defendants were convicted not only of conspiring to convert government property in violation of § 641, but also conspiring to commit Title 15 securities fraud and to defraud the United States in violation of 18 U.S.C. § 371. The government conceded that the jury’s general verdict consisted of both legally valid and legally invalid objects, but asserted that any error was harmless because “the § 371 defraud-clause objects were not affected by Kelly and remain legally valid.” Blaszczak II, 56 F.4th at 237.The Majority OpinionWriting for the 2-1 majority, Circuit Judge Amalya Kearse—who dissented in Blaszczak I—agreed with the government’s interpretation of Kelly and held that CMS’s confidential information did not constitute “property” for the purposes of securities or wire fraud under Title 18. While Judge Kearse acknowledged that the government’s confession of error did not compel her conclusion, she agreed that the substantive fraud counts could not stand in the wake of Kelly. Judge Kearse reasoned that because the relevant information obtained from CMS is “regulatory in character,” such information should not be considered “money or property of the victim; and they are not a ‘thing of value’ to CMS tha

In United States v. Blaszczak,the Second Circuit recently remanded a criminal conviction concerning the misappropriation of confidential information to the District Court in light of the Supreme Court’s decision in Kelly v. United States, which held that a scheme to alter “a regulatory choice is not one to appropriate the government’s property” for purposes of the wire fraud statute. The Second Circuit previously affirmed convictions against defendants David Blaszczak, Theodore Huber, Robert Olan, and Christopher Worrall for conversion of government property, 18 U.S.C. § 641, and wire fraud, 18 U.S.C. § 1343, as well as convictions against Blaszczak, Huber, and Olan of Title 18 securities fraud, 18 U.S.C. § 1348, and related conspiracy charges under 18 U.S.C. §§ 371, 1349. The convictions all stemmed from a scheme that involved misappropriating confidential information from the Centers for Medicare & Medicaid Services (“CMS”), at which certain defendants previously worked.On remand, the defendants argued, and the Government agreed, that the CMS information at issue “does not constitute ‘property’ or a ‘thing of value’ within the meaning” of the relevant statues after Kelly, such that the convictions on the substantive counts should be reversed and dismissed. The Second Circuit agreed. The Government sought affirmance on the remaining conspiracy convictions, but the Second Circuit vacated those convictions and remanded for further proceedings because the verdicts did “not reveal whether the jury found that the charged defendants conspired to engage in alleged conduct other than that which the government no longer contends was criminal.” This case is likely to have far-reaching implications for future prosecutions based on the misappropriation of g

On another, it led them to abandon $155,000 in virtual currency.Interestingly, the criminal complaint’s charge of conspiracy to defraud the United States appears to rest on the theory that the defendants allegedly frustrated the due diligence efforts of virtual currency exchanges and other financial institutions under the BSA, thereby preventing them from filing required Suspicious Activity Reports with the Financial Crimes Enforcement Network (“FinCEN”). This appears to be the first time that the government has charged the “defraud the United States” prong of the federal criminal conspiracy statute, 18 U.S.C. § 371 (a very common charge), by using the theory that causing financial institutions to not comply with their BSA obligations defrauded FinCEN.This appears to be the first time that the government has charged the “defraud the United States” prong of the federal criminal conspiracy statute, 18 U.S.C. § 371 (a very common charge), by using the theory that causing financial institutions to not comply with their BSA obligations defrauded FinCEN.Second and relatedly, the use of financial institutions permits law enforcement to connect personal information to otherwise anonymous cryptocurrency wallets and cryptocurrency. Just like with cash, even when the BSA does not stop money laundering in its tracks, KYC and other customer due diligence procedures may provide important information that helps fuel law enforcement’s investigation.

On September 20, 2018, the United States filed a grand jury indictment against Pursley. The indictment alleged four counts—one for conspiracy to defraud the United States under 18 U.S.C. § 371 and three for tax evasion under 26 U.S.C. § 7201.Pursley moved to dismiss all counts as barred by the statute of limitations. The government opposed the motion to dismiss on the grounds that the lower court had entered a suspension order.

[co author: Markus Speidel]On Tuesday, January 19, 2021, the Department of Justice announced charges against two providers of foreign language services for conspiracy to defraud the government on a multimillion dollar contract by impeding, impairing, obstructing, and defeating competitive bidding. The two companies, Comprehensive Language Center Inc. (CLCI) and Berlitz Languages Inc. (Berlitz), have admitted to the charges.Berlitz and CLCI admitted to violating 18 U.S.C. § 371 by discussing, agreeing to, and facilitating the submission of false and misleading information to the National Security Agency (NSA) between March and December 2017. The charges relate to a multiple award indefinite delivery, indefinite quantity (IDIQ) contract vehicle for foreign language instruction, under which the NSA awarded three prime contracts.