MONEYLAUDNERING LAW NETTING MORE SMALL FRY

A sentencing weapon Congress intended for use against drug loards is being
wielded against other defendants. Judges and others say this has diminshed
legal fairness.

WASHINGTONJose Caba considered himself a hardworking, lawabiding man,
an immigrant who built a business selling groceries in a poor Brooklyn
neighborhood.

But when he started illegally redeeming food stamps and depositing the
proceeds into a bank account, prosecutors thought otherwise. They accused
him of money laundering and sought a harsh sentence.

Caba, who thought he was only bending administrative rules, isn't the kind
of criminal Congress had in mind when it decided to give prosecutors a
weapon to bring down powerful drug lords. Nevertheless, he is one of a
growing number of defendants who commit routine fraud and find themselves
facing bigtime charges of money laundering.

The moneylaundering statute provides harsh penalties because it was
intended to prevent kingpins from using sophisticated schemes to conceal
drug money. More and more, though, prosecutors are invoking it in simple
fraud, bribery and embezzlement cases, a trend that doesn't sit well with
many federal judges or the U.S. Sentencing Commission.

In a strongly worded report, the commission, which draws up sentencing
guidelines for federal crimes, is recommending that the sentences for money
laundering be reworked. The penalties are unfair, the commission said,
because they often vastly exceed the seriousness of the crime.

Caba would have faced 2 to 2 1/2 years in prison for food stamp fraud, but
because he deposited funds in a bankthereby meeting the definition of
laundering the moneyhe was looking at 10 to 12 years.

U.S. District Judge Daniel Trager refused to impose such a sentence, saying
that to do so ``would make a mockery'' of the sentencing guidelines and
``grossly exaggerates the seriousness'' of Caba's conduct. Instead, Trager
imposed a 2 to 2 1/2year sentence for food stamp fraud.

``The judge recognized it was not what (the charge) was intended
for,'' said

Caba's New York lawyer, Gail Laser. ``Money laundering was aimed at the
drug trade, but the government was just going crazy on this guy.''

Nationally, statistics show a marked increase in moneylaundering cases.
In 1995, prosecutors charged 1,700 people with money laundering, up from
250 in 1990. More than half of the defendants charged in 1995 were involved
in nondrugrelated crimes.

Critics say the charge is used even more than the figures show because
prosecutors threaten defendants with the charge to get them to plead guilty
to the underlying crime.

``It has tremendous implications in the criminaljustice system because
prosecutors can use it as a tremendous bargaining stick: `Go to trial, see
an extra seven or eight years because we'll add this count,' '' said Gordon
Greenberg, a defense attorney and an expert on money laundering. ``Every
single crime, theoretically, can be converted into money laundering because
the statute is that broad.''

What's more, prosecutors in some areas routinely file the charge, while
others decline to do so. As a result, ``proportionality is lost and
appropriate uniformity is lost,'' said Jonathan Wroblewski, director of
legislative and public affairs for the sentencing commission.

``The sentencing structure for moneylaundering cases does not best achieve
the goals of the Sentencing Reform Act, which were uniformity and reducing
unwarranted disparity. That's why we have made these recommendations for
changes.''

Congress made money laundering a federal crime in 1986 as part of the
AntiDrug Abuse Act. The law prohibits people from trying to conceal their
illicit proceeds or using the money to further their criminal activity. At
the time, Congress envisioned the law being used against largescale drug
traffickers or organized crime.

To that end, the commission set a high sentence for money laundering in
1987 when it drew up the sentencing guidelines for federal crimes.

The stiff sentences also apply to defendants who make no attempt to cover
up their proceeds. Caba laundered money by depositing it into a bank, even
though his deposits were by check and he paid taxes on his proceeds.

``For all intents and purposes, if you use your illgotten gains, it's
money laundering,'' said Alan Chaset, a lawyer who chairs the American Bar
Association's committee on sentencing guidelines. ``If you take the money
and put it in a bank and then withdraw it and buy a stick of gum, it's
money laundering.''

Some judges refuse to impose the sentence in cases where there was n
elaborate scheme to conceal the money, such as a 1994 case in which
prosecutors charged a defendant with money laundering when he put cash from
drug sales into a shoe box. Some also will refuse to impose the sentence if
they believe the crime seems far removed from the conduct the
moneylaundering statute was intended to deter.

According to the sentencing commission, the judicial dissatisfaction is
great. Judges in 15.4 percent of moneylaundering cases not tied to drugs
departed from the sentencing guidelines to impose less severe sentences.
That rate is 32 percent higher than the overall departure rate for all
crimes.

The commission proposed rewriting the moneylaundering guidelines in 1995
to address these concerns. It wanted to tie moneylaundering sentences to
the seriousness of the underlying crime and take into account the lengths
defendants went to hide the money.

The proposals went nowhere, however, because they got tangled up in a
controversial commission recommendation that would have removed some of the
discrepancies in sentences for powder and crack cocaine. The Justice
Department opposed the recommendations, and Congress did as well, though
lawmakers focused all the attention on the cocaine issue.

Justice Department officials say the moneylaundering charges are necessary
because fraud penalties are too low under the sentencing

guidelines. They also deny they threaten defendants with a harsh
moneylaundering sentence in order to get guilty pleas.

Justice Department officials have, however, implemented guidelines for
prosecutors to use when considering filing moneylaundering charges in some
cases, a move they say will cut back on sentencing disparity. They also are
going to more closely monitor cases in which the defendant's only attempt
to ``launder'' the money is depositing it in the bank.

In its September report, the commission said the changes fall short.
Prosecutors in different areas still follow different practices, and they
still can threaten defendants with moneylaundering charges to get them to
plead guilty to underlying crimes.

``Because of the broad prosecutorial discretion in charging the crime, the
prosecutor can determine the sentence,'' said U.S. District Judge Marvin
Aspen, chief judge of the Northern District of Illinois. ``This is all done
sub rosa. Nobody knows about it, as opposed to judicial discretion of the
past, which is right up front for everybody to see.''