Tuesday, March 11, 2008

Prostitution & Federal Criminal Law   [Andy McCarthy]

I have been bugged out with the flu, and as a result I've seen a lot of the commentary — including, of course, "expert" commentary, which has been something less than expert.

The general approach of the federal law to prostitution mimics its approach to gambling.  They are activities that tend to generate big profits for organized crime syndicates, which profits not only enrich the racketeers but underwrite their various other rackets, including loan-sharking, narcotics trafficking, murder-for-hire, etc.

In Governor Spitzer's case, moreover, it's worth remembering the Nevada senator character in Godfather II who is blackmailed into doing the Corleones' bidding on Capitol Hill.  That vignette involved a murder frame-up in a brothel, but the extortion scheme was realistic because the senator had patronized a prostitution business run by the mafia.  (A similar issue arose with President Clinton's phone-sex on non-secure phones with Monica Lewisky — which was not a "private matter" because it raised the specter of a U.S. president's leaving himself vulnerable to blackmail by any foreign intelligence service that managed to tap the phone.)

In any event, it would seem Spitzer has more to worry about than just the Mann Act — which has been on the books since 1910 (it's now located at Sections 2421 et seq. of Title 18, U.S. Code) and proscribes interstate transportation in aid of prostitution.

The racketeering laws contain a provision, much loved by prosecutors, commonly known as the "Travel Act" — and more formally as "Interstate and foreign travel or transportation in aid of racketeering enterprises."  The Travel Act makes it a crime to travel in interstate commerce with the intention of, among other things, promoting, conducting or distributing the proceeds of unlawful activity (expressly including prostitution), if, after the travel, such an illegal activity is performed.  It would, for example, be a felony violation of the Travel Act (punishable by up to five years' imprisonment), to travel across state lines (or aid and abet a prostitute in doing so) for the purpose of promoting or carrying on the business of a prostitution ring; it would, similarly (and separately), violate the Travel Act to send the prostitute back across state lines to distribute the proceeds of the prostitution.

Then there is money laundering.  Steve Spruiell mentioned "structuring" yesterday, referring to an ABC report.  Contrary to Brian Ross's suggestion, it's not an obscure crime at all — it's very frequently prosecuted.  Under federal law, banks are required to file currency transaction reports for cash transactions over $10K.  The idea is to smoke out organized crime and/or narcotics enterprises — innocent people in legitimate cash businesses have no concern about filing CTRs.  But if you are generating cash by illegal transactions, you have a motive to evade the CTR requirements.  What such people will frequently do is, say, break a single $30K transaction into four deposits or withdrawals of less than $10K—the transaction is thus "structured" to avoid triggering the CTR requirement.  If that is done with criminal intent, it's a felony under the money laundering laws.

But there's an even simpler money laundering law that I imagine the Governor may be concerned about.  You have committed a felony violation, punishable by up to 20 years in jail, if you have money that is the proceeds of some form of illegal activity (including prostitution), and you conduct a financial transaction with those proceeds (a) with the intention of promoting certain crimes (including prostitution), or (b) with the knowledge that the transaction is designed to conceal how the proceeds were generated.  If I understand the allegations correctly, Spitzer not only obtained and paid in cash in order not to leave a paper trail, but paid extra cash in order to set up a credit with the prostitution ring for future use.  That raises the possibility of money laundering under both the promotion and concealment theories.

And it bears noting we are speculating at this point based on the single episode we know about.  I think it's fair to assume, in light of the level of familiarity exhibited in the conversations described in the complaint, that there are other episodes and that the government knows more than what it has so far alleged.

Finally, I'd note that these laws have all been on the books for a long time because they reflect society's view of what ought to be illegal.  If the society had evolved beyond prostitution being criminal, the laws would have been repealed.  They haven't been — not because we think it's the most serious crime in the world (most Johns are not prosecuted), but because we recognize that prostitution harms the society, not least by fueling enterprises that do engage in serious crime.

03/11 02:24 PMShare