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Money Laundering, Obstruction of Justice, And A Full-Service Lawyer

Walter Blair was a full-service lawyer. He received a phone call from a woman who wanted to hire a criminal defense lawyer. The woman’s name was Ms. Nicely. Ms. Nicely had a relatively intricate problem.

The Safe Full of Money

As it happened, she was in possession of a safe that contained a substantial amount of money that belonged to Mr. Rankine. Mr. Rankine was a drug-dealer. The money was drug money. Mr. Rankine’s girlfriend had been found murdered, and Mr. Rankine was missing.

Ms. Nicely had been receiving threats about the money in the safe and became frightened. Through a referral from a co-worker, Mr. Henry, she contacted Mr. Blair.

They met. Mr. Blair told her to open the safe “by any means necessary” and bring the money to him. She did.

 

$170,000

Mr. Blair and Mr. Henry counted the money – there was approximately $170,000. Mr. Blair made up a cover story about a joint investment headed by Mr. Rankine’s girlfriend. Since she was no longer living, she couldn’t repudiate the story.

Mr. Blair then had his law partner create a corporation to take the money so that Ms. Nicely and Mr. Henry could invest in real estate. This was in 2003 when investing in real estate seemed less like investing in Smurf collectibles.

Mr. Blair also told Mr. Henry and Ms. Nicely that they would need to set aside money to cover the legal fees for two of Mr. Rankine’s colleagues who had been arrested and were charged in the U.S. District Court in Richmond Virginia.

The Federal Case In Virginia

Mr. Blair reached out to two Virginia lawyers to represent Mr. Rankine’s colleagues. Mr. Blair also retained himself to represent the men. Eventually, he filed a pro hac vice motion in the federal case in Virginia.

(A pro hac vice motion is a motion that lets an attorney practice law in a court that she is not otherwise admitted to practice in for one time only, provided certain conditions are met).

As a part of the pro hac vice motion, Mr. Blair told the court that he had never been disciplined by any bar association. As it happened, that was not entirely accurate – Mr. Blair had previously had his law license suspended in West Virginia for witness tampering.

Things Break Bad

Mr. Blair gave Ms. Nicely a set of things to memorize about how all of these transactions were supposed to have gone down. Sadly, when interviewed by the FBI, Ms. Nicely was not 100% in line with Mr. Blair’s instructions. Oh what a tangled web we weave.

Mr. Blair was indicted for money laundering, in violation of 18 U.S.C. § 1956 and § 1957 for his handling of the funds brought into his office. He was charged with obstruction of justice for his false statement in his pro hac vice motion under 18 U.S.C. § 1503. He was also charged with failing to file a tax return.

On appeal, he had two main challenges. The Fourth Circuit gave Mr. Blair a split decision in United States v. Blair.

The Money Laundering Safe Harbor Issue

First, the money laundering statute has a safe harbor provision for criminal defense attorneys who are receiving money from someone to mount a defense. Mr. Blair contended that this safe harbor provision sheltered him from one of the money laundering charges against him.

There’s been a lot of attention to this issue lately, particularly since the Eleventh Circuit rejected a government money laundering prosecution in United States v. Velez. The basic rule of the safe harbor provision is that if a person has money that was derived from illegal conduct, and uses that money to pay for a defense attorney, that transfer cannot be the basis of a money laundering conviction. Section 1957(f)(1) recognizes that the Sixth Amendment protection of the right to counsel is more important than criminalizing this behavior.

Here, though, the Fourth Circuit rejected the safe harbor provision’s application to Mr. Blair. As Judge Wilkinson said,

Blair used someone else’s criminally derived proceeds to bankroll counsel for others.

This, the majority found, exceeds the scope of the safe harbor provision. Though Judge Traxler wrote a forceful dissent arguing that the safe harbor provision should apply.

Obstruction of Justice Challenge

Mr. Blair fared much better on his challenge to the obstruction of justice conviction. The government argued that lying on a pro hac vice motion is obstruction of justice. To do that, the prosecutors had to successfully “establish a nexus between the false statement and the obstruction of the administration of justice.” That is, the government had to show that Mr. Blair’s false statement “had a natural and probable effect of impeding justice.”

The Fourth Circuit found no evidence that Mr. Blair lying about his West Virginia disciplinary troubles caused any problems, or was likely to cause any problems, with anything. Mr. Blair’s representation was already a massive conflict of interest – his lie was just icing.

The court of appeals concluded that the government’s allegations rested on “mere speculation.”

The appellate court, then, vacated Mr. Blair’s conviction for obstruction of justice, and remanded for resentencing without that count of conviction.