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Federal prosecutors using the USA Patriot Act to go after unlicensed money-transmitting businesses are unconstitutionally transforming the offense from an infraction of states’ licensing regulations into a federal felony, criminal defense lawyers allege. Defense attorneys claim that if the government can build a series of successful prosecutions against people who run unlicensed mom-and-pop “Western Union” businesses, its reach could extend to nonprofits, religious groups and other charitable institutions that collect and distribute money. Maria Fregoso-Bonilla, a middle-aged Mexican national living legally in Milwaukee, allegedly admitted to federal agents in December 2005 that for the past year she collected money from people and sent it to Utah. From there, it was forwarded to areas in Mexico, according to court records. Fregoso-Bonilla, who was federally charged with operating an unlicensed money-transmitting business, claims that in order to prosecute her, the government first has to prove that she knew she needed a license to operate a money-transmitting business. U.S. v Fregoso-Bonilla, No. 05cr325 (E.D. Wisc.). Fregoso-Bonilla and others claim that the law Congress amended after the Sept. 11, 2001, terrorist attacks violates defendants’ due process rights because it provides that people operating legitimate money-transmitting businesses without a license may be prosecuted even if they don’t know they need a license. So far, most courts appear to disagree. Last week, U.S. District Judge Lynn S. Adelman, who presides in Fregoso-Bonilla, denied her motion to dismiss the indictment. The 4th U.S. Circuit Court of Appeals recently reversed a Maryland federal district judge’s dismissal of an indictment against a family-run money-transmitting business, sending that case back for further proceedings. U.S. v Talebnejad, No. 04-4841 (4th Cir.). The 4th Circuit held that the federal indictment need not allege that Iranian immigrants Farhad Talebnejad and his parents, Abdolrahman and Fatemeh Talebnejad, knew that state law required them to license their business. The statute, 18 U.S.C. 1960, addresses money-transmitting businesses operating without required state licenses or not in compliance with federal registration requirements for such businesses. The statute does not include people or entities allegedly laundering money or sending it to terrorists. Scott A. Wales of the Safer & Stein Law Firm in Milwaukee, who represents Fregoso-Bonilla, said, “[t]his is a new line of prosecution. Someday you’re going to see a respected institution run by a reputable person prosecuted because some program or cause it is funding runs counter to the political agenda of whomever is in power.” Fregoso-Bonilla failed to register as a cash-transmitting business, “a six-month misdemeanor offense in Wisconsin that my research indicates has never been prosecuted in the state’s history,” he said. Wales also noted that he has not been able to find a single Wisconsin pattern jury instruction relating to the offense. Though not charged with money laundering, Fregoso-Bonilla has been linked to a federal money laundering conspiracy in Utah through her co-defendant in the money-transmitting case. Her codefendant is related to one of the Utah money laundering defendants, who may be a government cooperating witness against Fregoso-Bonilla, Wales said. A patchwork of laws Dale P. Kelberman of Baltimore’s Miles & Stockbridge, who represents Fatemeh Talebnejad, has asked the 4th Circuit for a rehearing of the case by the panel or the full appellate bench. He said state laws governing these businesses differ widely. Maryland law makes it a felony for money-transmitting businesses to knowingly violate the state licensing requirements. The same offense is a misdemeanor without a specific knowledge requirement in Wisconsin, but Alabama has no licensing requirements for such businesses. The Talebnejads knew about Maryland’s licensing requirement, the violation of which became a felony offense after they had been in business for several years. But they never thought that it applied to them, according to the 4th Circuit opinion. The U.S. Department of Justice referred calls for comment to the offices of the U.S. attorneys handling the cases. Paul L. Kanter, chief of the criminal division of the U.S. Attorney for the Eastern District of Wisconsin, and Marcy Murphy, spokeswoman for Rod J. Rosenstein, U.S. Attorney for the District of Maryland, said that their respective offices do not comment on cases going to trial. 4th Circuit decision in U.S. v Talebnejad District Judge Lynn S. Adelman’s opinion in U.S. v Fregoso-Bonilla

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