Tough Questions for Government in Attorney Money-Laundering Case

John Pacenti

Daily Business Review

There appeared to be little love Wednesday on the 11th U.S. Circuit Court of Appeals for a money-laundering case against prominent Miami attorney Ben Kuehne and two Colombians charged with funneling drug money to the United States to pay the legal bills of Medellin drug kingpin Fabio Ochoa.

The outcomes of appellate hearings are hard to handicap, being by nature a devil's advocate forum. But Assistant U.S. Attorney Vijay Shanker with the Justice Department's appellate division in Washington was on the ropes much of the time in two sets of arguments defending the government's positions. After the judges left the bench, Shanker shrugged at the prosecutor trying the case, who was observing from the gallery.

The case has been hobbled by rulings from U.S. District Judge Marcia Cooke, who dismissed a money-laundering conspiracy charge against Kuehne and dropped a Colombian accountant as a co-defendant. Kuehne, who represented Vice President Al Gore in the 2000 presidential recount fight, was present, wearing a trademark bowtie.

The first hearing centered on a 1988 amendment to the federal money-laundering law protecting criminal defense attorneys from prosecution if they accept tainted funds from defendants. The exception is designed to protect the constitutional right to counsel under the Sixth Amendment.

The second hearing pivoted on whether the government violated the speedy trial rights of co-defendant Gloria Flores Velez, who was indicted under seal in 2005 for allegedly lying to investigators by saying Colombian banks refused to exchange pesos for dollars for Ochoa.

Prosecutors say Kuehne knowingly funneled Ochoa family drug profits to the United States using a black market money exchange to pay $5.2 million to his defense team led by Miami criminal defense attorney Roy Black. Kuehne concluded all the money came from legitimate Ochoa family enterprises, such as cattle ranching.

The panel consisted of appellate Judges Rosemary Barkett and Frank M. Hull and U.S. District Judge Gordon Quist of Grand Rapids, Mich., who was sitting by designation.

Barkett and Hull hammered Shanker with questions on the 1988 exception and his contention that the U.S. Supreme Court has rendered it meaningless.

"The right of representation as guaranteed by the Sixth Amendment does not include the use of illegal proceeds," Shanker said.

Barkett dominated the questioning in Kuehne's hearing and appeared frustrated at times with Shanker's responses.

"If it weren't illegal proceeds, you wouldn't need an exception," she said.

John Nields, one of Kuehne's defense attorneys from the Howrey firm in Washington, was brief in his argument. He said legal fees can be seized, but attorneys can't lose their liberty over untainted fees.

Congress "did not want the criminal defense bar to be frightened away from defendants," Nields said. "They were trying to remove the chilling effect."

"It would be very bad for our criminal justice system" if the court overturned Cooke, Nields warned.

In the second hearing, prosecutors argued they had no choice but to keep the 2005 indictment against Velez under seal to build the "complex conspiracy case" against Kuehne and the other co-defendant, Colombian lawyer Oscar Saldarriaga Ochoa.

Attorney Ricardo Bascuas of the University of Miami School of Law, arguing on behalf of Velez, said his client was told she was not a suspect for months and missed valuable opportunities to defend herself by contacting key witnesses.

The hearing veered in an unusual direction when the judges appeared confused about whether a parallel money exchange used by Kuehne was illegal. Shanker conceded said the so-called black market peso exchange is perfectly legal despite the name given to it by the Justice Department.

The government also vehemently denied Kuehne was set up in a sting when undercover agents placed $1.8 million in traceable funds with a money broker facing money-laundering charges in New York.

"This was not a sting to catch Mr. Kuehne," Shanker said.

Miami criminal defense attorney David O. Markus, who helped write an amicus brief on Kuehne's case for the National Association of Criminal Defense Lawyers, said he was optimistic that Cooke's rulings will be upheld.

"I thought some of the unprecedented positions the government took showed how truly weak its position really is," he said.