United States v. Blair
661 F.3d 755, 81 A.L.R. Fed. 2d 635, 2011 U.S. App. LEXIS 19326 (2011)
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Rule of Law:
The safe harbor provision of 18 U.S.C. § 1957(f)(1), which exempts certain transactions for attorney's fees, is co-extensive with the Sixth Amendment and does not protect a transaction where an individual uses another person's criminally derived funds to secure legal representation for third parties.
Facts:
- Anthony Rankine, leader of a large marijuana distribution ring, had his associate, Elizabeth Nicely, store a safe for him.
- After Rankine was murdered, Nicely, fearing for her safety, confided in her coworker Michael Henry that the safe contained drug money.
- Henry and Nicely consulted with attorney Walter L. Blair, telling him the money was from a drug ring and they were frightened.
- Blair instructed Nicely and Henry to open the safe, bring him the cash, and misrepresented the total amount counted, keeping a large portion for himself.
- Blair concocted a cover story that the cash was 'partner money,' a legitimate Jamaican asset-pooling arrangement.
- Blair established a sham real estate corporation for Nicely to launder the funds.
- Using the drug proceeds, Blair purchased two $10,000 cashier's checks to retain attorneys for two of Rankine's arrested associates, Dashawn Saunders and Richard Bernard.
- Blair also took nearly $10,000 of the drug money for himself, claiming it was a fee to act as co-counsel for Saunders.
Procedural Posture:
- Walter L. Blair was charged in a multi-count indictment in the United States District Court.
- Blair filed a pre-trial motion to sever two failure-to-file tax charges from the other counts, which the district court denied.
- Blair also filed a motion to dismiss the § 1957 money laundering count based on the statutory safe harbor, which the district court denied.
- Following a trial, a jury convicted Blair on all counts presented, including concealment money laundering, transactional money laundering (§ 1957), and obstruction of justice.
- Blair appealed his convictions on the money laundering counts, the obstruction of justice count, and the denial of his motion to sever to the United States Court of Appeals for the Fourth Circuit.
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Issue:
Does the safe harbor provision of 18 U.S.C. § 1957(f)(1), which exempts a transaction 'necessary to preserve a person's right to representation as guaranteed by the sixth amendment,' protect an attorney who knowingly uses a drug kingpin's illicit proceeds to hire counsel for other members of the drug conspiracy?
Opinions:
Majority - Per Curiam and Wilkinson, J.
No, the transaction is not protected by the safe harbor provision. The court affirmed Blair's money laundering convictions under § 1956, finding sufficient evidence that his actions were designed to conceal the nature and source of the drug proceeds. The court reversed Blair's obstruction of justice conviction, holding there was insufficient evidence to establish a nexus between his false statement on a pro hac vice application and the 'natural and probable effect of interfering with the due administration of justice.' Writing for the court on the § 1957 issue, Judge Wilkinson explained that the safe harbor provision is explicitly tied to the Sixth Amendment right to counsel. Citing Supreme Court precedent in Caplin & Drysdale, the court reasoned that the Sixth Amendment does not grant a defendant the right to spend another person's money, particularly criminally derived funds, to hire an attorney. Blair's conduct fell far outside this constitutional guarantee because he used Rankine's drug money (not his own) to hire counsel for third parties (Saunders and Bernard), which is not a personal right protected by the Sixth Amendment. To interpret the exemption more broadly would create a 'safe ocean' that would 'swamp the rule' and enable criminal enterprises to fund defenses for their members, creating serious conflicts of interest.
Dissenting - Traxler, C.J.
Yes, the transaction should be protected by the safe harbor provision. The dissent argued that the majority's interpretation renders the safe harbor provision meaningless. Since § 1957 only applies to transactions involving criminally derived property, a rule stating the safe harbor does not apply to such property effectively nullifies the exemption. The statutory text protects a transaction 'necessary to preserve a person's right to representation,' meaning the representation, not the transaction itself, must be of the type guaranteed by the Sixth Amendment. Congress specifically created this exemption to protect legitimate criminal defense attorneys from prosecution for accepting bona fide fees. The Supreme Court's decision in Caplin & Drysdale addressed forfeiture, not criminal liability under § 1957, and is therefore inapplicable as Congress chose to provide an explicit statutory exemption in § 1957 that it omitted from the forfeiture statute.
Analysis:
This decision significantly narrows the scope of the § 1957(f)(1) 'safe harbor' for attorney's fees, creating a circuit split with the Eleventh Circuit's broader interpretation in United States v. Velez. By holding that the statutory exemption is co-extensive with the constitutional right to counsel, the Fourth Circuit limits its protection to defendants using their own funds to hire counsel for themselves. This ruling increases the risk of money laundering prosecution for attorneys who knowingly accept fees derived from criminal activity, especially in cases involving third-party payments, potentially chilling the ability of some defendants to retain counsel of choice.
