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Wednesday, March 17, 2010

The Good Wife’s Gaffe on Money Laundering

Anyone who reads this blog knows I enjoy the courtroom drama The Good Wife. I try not to be hypersensitive when they get things wrong because they do so well. But this week’s episode went off the rails a bit. In the story, a known drug dealer being pursued by the FBI for all sorts of criminal activity leaves a bag containing $200,000 in cash in a lawyer’s office. When the firm inquires, he says it’s a retainer. The lawyers then engage in a serious debate as to whether or not to take on this client. As far as I can tell (it wasn’t clear), they ended up keeping the money.

There’s so much wrong with this picture it’s hard to know where to start. So I’ll start with how they’ll all end up in jail. The first reason they’d never take the cash is that they’d have to fill out a Form 8300 with the IRS telling them where you got the cash. A drug dealer wouldn’t want that to happen, so he’d never hire a legitimate firm if he wanted to pay in cash. Don’t file the form, go to jail and pay a fine. Way too risky for most lawyers.

Let’s assume the firm filed the form. They’ve accepted criminal proceeds. The FBI is watching. They’ll be prosecuted for accepting the proceeds. Or at least the FBI will seize it and institute forfeiture proceedings to take it away. And they might just snatch up some firm assets along the way and claim they’re bought with criminal proceeds. The firm would be tied up for years defending themselves. I know a lawyer who faced years of criminal prosecution because he vetted money another lawyer was paid to make sure it didn’t come from criminal proceeds. The government claimed he knew the proceeds were dirty and issued the opinion wrongfully. He didn’t even get the money. He just told another lawyer it was okay to take the money. He was recently acquitted, but it took years of anxiety, hundreds of thousands of dollars in legal fees, and a somewhat damaged reputation. Imagine what happens if the FBI thinks you actually took the money knowing it was dirty.

If the firm tried to get the client to pay in installments of $9000, they’d be guilty of the crime of structuring transactions to avoid the reporting, which is an even bigger criminal offense.

And who’s to say they aren’t being set up in a sting in order to reduce someone’s sentence?

I’m not saying that law firms aren’t faced with this dilemma every day (although nobody’s ever tried to hand me a giant bag of cash, so what gives?), but the lawyers in the show didn’t even blink at the consequences. There should have been some discussion of how the FBI would come down on them if they were caught accepting the money. A mention of the reporting requirements. Something showing the audience that the writers were aware it was a big risk to accept the money. Instead, the lawyers had the money piled in their office for anyone to see.

Legit law firms would simply refuse the bag of cash and decline the representation, or tell the client they had to report it and let the client decide to hire a different firm. Crooked firms would take the cash and the client, but would be aware that they were part of a crime when they did so. The writers needed to choose which kind of firm they were writing about and let us know. They didn’t.

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