White collar crime is a broad category of non-violent offenses generally involving deception, financial manipulation, or the abuse of a position of trust for financial gain. Federal white collar cases, including money laundering and racketeering charges, are investigated by agencies such as the FBI, IRS Criminal Investigation, and the Department of Justice, and prosecuted by the U.S. Attorney's Office rather than a local state's attorney or commonwealth's attorney. These investigations frequently run for months or years before any charges are filed, often involving grand jury subpoenas, financial record review, and witness interviews long before a target is ever indicted.
This page provides general information about two of the most serious federal white collar statutes, money laundering under 18 U.S.C. § 1956 and § 1957, and racketeering under the RICO statute, 18 U.S.C. § 1962, along with a general explanation of how a federal grand jury investigation works. If you believe you are the subject of a federal investigation or have already been charged, the information below is educational only and is not a substitute for speaking with an attorney about your specific situation.
If you're facing a federal white collar investigation or charges and need an experienced criminal defense lawyer, contact us online or call (410) 995-1515 for a free initial consultation.
Federal Money Laundering (18 U.S.C. § 1956 & § 1957)
18 U.S.C. § 1956, titled "Laundering of monetary instruments," generally applies to a person who conducts or attempts to conduct a financial transaction involving the proceeds of a "specified unlawful activity," knowing that the property involved represents the proceeds of some form of unlawful activity. The statute covers several distinct types of conduct:
- Subsection (a)(1): domestic financial transactions conducted with the intent to promote specified unlawful activity, to conceal or disguise the nature, source, ownership, or control of the proceeds, or to avoid a transaction reporting requirement under state or federal law.
- Subsection (a)(2): transporting, transmitting, or transferring monetary instruments or funds into or out of the United States with intent to promote unlawful activity, or knowing the funds represent unlawful proceeds and are being moved to conceal their nature or avoid reporting requirements.
- Subsection (a)(3): financial transactions involving property represented, typically by an undercover officer or cooperating witness, to be the proceeds of specified unlawful activity, conducted with intent to promote the activity, conceal the proceeds, or avoid reporting requirements.
As written in 18 U.S.C. § 1956, the statutory penalty structure is:
- Violations under (a)(1) or (a)(2): a fine of not more than $500,000 or twice the value of the property, monetary instrument, or funds involved, whichever is greater, or imprisonment of not more than 20 years, or both.
- Violations under (a)(3): a fine under Title 18, or imprisonment of not more than 20 years, or both.
18 U.S.C. § 1957, titled "Engaging in monetary transactions in property derived from specified unlawful activity," applies to a person who knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000, where that property is derived from specified unlawful activity. As written in 18 U.S.C. § 1957(b), the statutory penalty is a fine under Title 18, or imprisonment of not more than 10 years, or both. As an alternative to the standard fine, the statute allows the court to impose a fine of not more than twice the amount of the criminally derived property involved in the transaction.
Racketeering Charges (RICO, 18 U.S.C. § 1962)
The Racketeer Influenced and Corrupt Organizations Act, commonly called RICO, is codified at 18 U.S.C. §§ 1961 through 1968. The offense section, which defines the prohibited conduct, is 18 U.S.C. § 1962, titled "Prohibited activities." RICO does not create a single offense, it prohibits several distinct types of conduct connected to an "enterprise" and a "pattern of racketeering activity":
- Subsection (a): using or investing income derived from a pattern of racketeering activity or the collection of an unlawful debt to acquire an interest in, or to establish or operate, an enterprise affecting interstate or foreign commerce.
- Subsection (b): acquiring or maintaining an interest in or control of an enterprise through a pattern of racketeering activity or the collection of an unlawful debt.
- Subsection (c): being employed by or associated with an enterprise and conducting or participating in the conduct of that enterprise's affairs through a pattern of racketeering activity or the collection of an unlawful debt.
- Subsection (d): conspiring to violate any of the provisions of subsection (a), (b), or (c).
Section 1962 itself does not set out any penalties. The criminal penalties for a RICO violation are established separately in 18 U.S.C. § 1963, titled "Criminal penalties." As written in 18 U.S.C. § 1963(a), a person convicted of a RICO violation faces a fine, or imprisonment of not more than 20 years, or both. If the RICO violation is based on racketeering activity for which the maximum penalty includes life imprisonment, the maximum term of imprisonment under Section 1963 increases to life. Section 1963 also requires forfeiture of any interest acquired or maintained in violation of Section 1962, any interest in the enterprise involved, and any proceeds derived from the racketeering activity or unlawful debt collection.
Understanding a Federal Grand Jury Investigation
Federal charges are typically brought through a grand jury, a group of citizens who review evidence presented by federal prosecutors to decide whether there is probable cause to issue an indictment. Understanding the general shape of this process, in broad terms, can help someone recognize what is happening if they become involved in one. This section is general education only. It is not guidance on how to respond to an actual subpoena, target letter, or ongoing investigation, if you are involved in an active matter, contact an attorney immediately rather than relying on anything written here.
Prosecutors and investigators commonly use three general categories to describe a person's status in an investigation:
- Target: a person the government has substantial evidence connecting to a crime and who prosecutors regard as a likely defendant.
- Subject: a person whose conduct is within the scope of the grand jury's investigation, but who has not been identified as a target.
- Witness: a person believed to have information relevant to the investigation, without being a target or subject.
These categories can and do change as an investigation develops. A person contacted as a witness or subject can later become a target, and status is not always disclosed to the person involved.
A grand jury subpoena is a legal command to appear and testify (a subpoena ad testificandum) or to produce documents, records, or other materials (a subpoena duces tecum). A target letter is a letter federal prosecutors sometimes, though not always, send to notify a person that they are considered a target of a pending grand jury investigation. Receiving a subpoena or target letter does not mean charges will follow, but both are serious developments that warrant immediate legal advice.
Grand jury proceedings are generally secret. Federal Rule of Criminal Procedure 6(e), a procedural rule of the federal courts rather than a criminal statute, governs this secrecy. It is not a stand-alone crime and carries no penalty section of its own, instead, Rule 6(e) restricts who may disclose matters occurring before the grand jury, including grand jurors, court reporters, and government attorneys, and it allows disclosure only in limited, enumerated circumstances, such as to other government personnel assisting the prosecutor or by court order. A violation of Rule 6(e) by a person bound by its secrecy obligations can be punished as contempt of court. Because grand jury secrecy rules are technical and the consequences of a misstep can be significant, anyone who receives a grand jury subpoena or target letter should contact an attorney immediately rather than attempting to navigate the process alone.
Contact Our Maryland & Virginia White Collar Crime Defense Attorneys Today
Federal white collar investigations often move slowly and quietly, and by the time an indictment is returned, the government has frequently spent months or years building its case. If you have been contacted by federal agents, received a grand jury subpoena or target letter, or been charged under the federal money laundering or RICO statutes, it is important to speak with an attorney before making any statements. Our firm handles federal criminal defense matters in the U.S. District Court for the District of Maryland (D. Md.) and the U.S. District Court for the Eastern District of Virginia (E.D. Va.). Every case is different, and nothing on this page is a substitute for individualized legal advice about your specific situation. If you are involved in an active federal investigation, consult an attorney before speaking with agents or prosecutors.
