Defense attorneys play a critical role in the criminal justice system. The Sixth Amendment to the U.S. Constitution ensures the right to counsel to a criminal defense even if he or she cannot afford to pay for an attorney.[i] However, in some instances, a defendant can not only afford an attorney, but they can afford to pay exorbitant amounts for legal representation with laundered drug money. Recent case law shows how a criminal defense attorney, in this scenario, could find themselves embroiled in the legal problems of their own clients.

Federal money laundering statutes,18 U.S.C. § 1956 and 18 U.S.C. § 1957, make it unlawful for an individual to engage in financial transactions with the property of a criminal defendant.[ii] However, the statutes require that the individual know that the property involved constitutes proceeds of a specified unlawful criminal activity.[iii] Recently, a criminal defense attorney violated these statutes by conducting transactions “designed to conceal or disguise the source, location, nature, ownership, or control of the criminal proceeds.”[iv]

For example, on April 25, 2023, the U.S. Court of Appeals for the Fourth Circuit affirmed the conviction of defense attorney Kenneth Ravenell for money laundering conspiracy.[v] The government successfully argued that Ravenell leveraged being a partner at his law firm to launder the money his clients generated through illegal drug activities.[vi] Ravenell was found guilty of laundering his client’s money by concealing the source of funds, directly in violation of sections 1956 and 1957.[vii]

Ravenell accepted over a million dollars in attorney’s fees. It was alleged that the money used to pay Ravenell for representation was derived from the drug funds of an indicted drug trafficker. There was evidence that Ravenell used these funds to directly benefit the drug trafficker and his criminal enterprise. Nevertheless, Ravenell’s conduct in his capacity as a defense attorney raised a concern for the court to address. The question raised was whether Ravenell’s involvement was protected by the safe harbor provision.

The safe harbor provision can be found at 18 U.S.C 1957(f)(1). The statute exempts “any transaction necessary to preserve a person’s right to representation as guaranteed by the Sixth Amendment of the Constitution.”[viii]  However, the court found support from case law in deciding that Ravenell’s conduct as a defense attorney in this case, was outside the purview of §1957(f)(1).[ix] Put simply, the U.S. Supreme Court and the Fourth Circuit have long held that no one has a constitutional right to use criminal proceeds to retain a defense attorney.[x] In Ravenell, Judge Wilkinson further stated that criminal defendants never have the right to use illegally obtained funds to hire a lawyer, and thus, an attorney cannot accept illegally procured gains as payment for legal purposes of §1957(f).[xi]

Those voicing an opinion in opposition view the language in Ravenell as having broad implications on other areas of white-collar crime.[xii] As it stands, the decision serves as a warning not only to attorneys but company executives and employees too. In fact, recent decisions show that circuit courts have not hesitated in affirming the convictions of attorneys and even paralegals for money laundering.[xiii] For instance, on December 19, the U.S. Eight Circuit Court of Appeals affirmed the convictions of Michael Grady and Oscar Dillon, who, as paralegals, aided a large-scale crime organization in part, by concealing drug money.[xiv] Grady and Dillon did this by acting as intermediaries for an indicted drug trafficker to pay attorney’s fees.[xv]

The controversy surrounding §1957 began almost immediately after its passing in 1987.[xvi] For example, even at the statute’s inception, a 1985 survey of members of the National Association of Criminal Defense Lawyers (“NACDL”) found that some attorneys would refuse to take a case if forfeiture of fees was at issue.[xvii] Some would argue that the prosecution of defense attorneys creates a slippery slope. It has also been argued that the dicta in Ravenell obfuscates §1957(f)’s intended purpose.  This is because Judge Wilkinson’s opinion goes as far as even interpreting instances where an attorney accepts illegal funds in furtherance of Sixth Amendment rights as a violation of the statute.[xviii] Nonetheless, both sides of the argument could agree that bad cases often make bad law.

The recent decisions should serve as a warning to criminal defense attorneys across the country, and it would be in their best interest to become well acquainted with the language found in sections 1956 and 1957. It is possible that a criminal defendant might find it difficult to retain an attorney as a result of the risks associated with money laundering-related charges. This could be construed as an undue burden that implicates a defendant’s Sixth Amendment rights.

[i] See U.S. Const. amend. VI.

[ii] See 18 U.S.C. § 1956; see also 18 U.S.C. § 1957.

[iii] See § 1956 (“Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity . . . .”); see also § 1957 (“knowingly engages or attempts to engage in a monetary transaction in criminally derived property . . . .”).

[iv] United States v. Ravenell, 66 F.4th 472, 486–87 (4th Cir. 2023).

[v] See id. at 476.

[vi] See id. at 477.

[vii] See id. at 476.

[viii] 18 U.S.C 1957(f)(1) (setting forth the safe harbor provision as an exemption to the statute)

[ix] See Ravenell. 66 F. 4th at 487 (“the Supreme Court and the Fourth Circuit have both made clear that Ravenell’s actions fall outside the protections of 18 U.S.C. § 1957(f)(1)’s safe harbor.”).

[x] See Caplin & Drysdale, 491 U.S. 617, 626 (1989) (establishing that no one has the right under the constitution to retain a defense attorney with criminally derived proceeds); see also United States v. Blair, 661 F. 3d 755 (4th Cir. 2011) (explaining the full scope of the safe harbor provision).

[xi] See Ravenell. 66 F. 4th at 487.

[xii] See Peter D. Hardy, Fourth Circuit Upholds Money Laundering Conspiracy Conviction of Balt. Defense Attorney, Ballard Spahr LLP, (May 14, 2023) https://www.moneylaunderingnews.com/2023/05/fourth-circuit-upholds-money-laundering-conspiracy-conviction-of-baltimore-defense-attorney/ (noting how the Ravenell decision has wide reaching implications beyond just drug related offenses).

[xiii] See United States v. Grady, 88 F. 4th 1246, 1253 (8th Cir. 2023) (“Grady and Dillon . . . worked at a paralegal and consulting company.”).

[xiv] See id. at 1246.

[xv] See id. at 1253 (“Terry made multiple payments to [Grady and Dillon] using drug proceeds with instructions that the money be delivered to Beau Brindley, an attorney, as a retainer securing his representation.”).

[xvi] See generally Paul G. Wolfteich, Making Criminal Defense a Crime Under 18 U.S.C. Section 1957, 41 Vand. L. Rev. 843, 861 (1988) (referencing how the NACDL and ABA had called for changes to the statute by as early as 1987); see also Phillip J. Griffin, Of Laundering and Legal Fees: The Implications of United States v. Blair for Criminal Defense Attorneys Who Accept Potentially Tainted Funds, 164 U. Penn. L. Rev. 179, 183 (2016) (“The critical response to §1957 was immediate and overwhelming.”).

[xvii] See Wolfteich, supra note xiv at 861–2 (explaining the results of a 1985 survey conducted of NACDL members).

[xviii] See Hardy, supra note xiii (“If taken literally, this language would obviate the entire point of Section 1957(f) . . . .”).