Health & Safety Code 11370.9 addresses the specific offense of California money laundering in connection with drug crimes.1
(In contrast, California Penal Code 186.10 PC sets forth a broad definition of money laundering that covers a wider range of behavior.2)
What is the legal definition of HS 11370.9 money laundering?
In order to convict a person of HS 11370.9 money laundering in connection with drug crimes, the prosecutor needs to prove certain facts (known as “elements” of the crime). You are only guilty of this offense if ALL of the below elements are found to be true:
- You received, acquired, or engaged in a transaction involving money or property that you knew was derived from a controlled substances offense, such as selling or transportation of a controlled substance;3
- You did so because you intended to conceal or disguise the source, ownership or control of the money;4 AND
- The total amount of laundered money was more than twenty-five thousand dollars ($25,000) in a thirty (30)-day period.5
According to Torrance criminal defense lawyer John Murray6:
“You can’t be convicted under Health & Safety Code 11370.9 unless your goal was to hide the fact that the drug money was drug money, or that it belonged to a drug dealer. So, if you earn money from a drug sale and spend that money on a new car just because you wanted a new car, you are not guilty of money laundering under THIS law—but you could be guilty under the general money laundering law in Penal Code 186.10 PC.”
Example: Tony sells a large amount of marijuana for $10,000 in cash. He deposits all that money into his bank account. His plan is to use it to pay his living expenses for the next few months.
Tony can’t be convicted under Health & Safety Code 11370.9 PC for two reasons: he did not deposit the money because he wanted to hide the fact that it came from a drug sale, and the amount of money was less than $25,000.
(However, he probably could be charged under Penal Code 186.10 PC, California’s more general money laundering law, which does not require intent to disguise the source of the money and has a lower threshold for the amount of laundered funds.7)
Example: Let’s say Tony likes the business of selling marijuana and goes on to make several more big sales. Now he has $30,000 in cash stashed in a drawer. He is nervous about having this much cash but is afraid to deposit it into a bank.
So Tony makes a deal with his friend Ian, who owns a restaurant. Tony gives the $30,000 in cash to Ian, who will use it to stock the cash register in his restaurant. In exchange, Ian will give Tony equity in his business that is worth $30,000.
Now Tony can be convicted under HS 111370.9—because he engaged in a transaction designed to hide the source of money earned from a drug crime, and the amount of money was more than $25,000.
Penalties for HS 11370.9 money laundering
Laundering the proceeds of a controlled substance is what is known as a “wobbler” in California law.8
This means that prosecutors may choose to charge it as either a misdemeanor or a felony, depending on your criminal history and the facts of the case.9
If HS 11370.9 money laundering is charged as a misdemeanor, the potential penalties include:
- Up to one (1) year in county jail; and/or
- A fine of up to one thousand dollars ($1,000).10
But if it is charged as a felony, the potential penalties are:
- Two (2), three (3), or four (4) years in state prison; and/or
- A fine of up to two hundred fifty thousand dollars ($250,000) or twice the amount laundered (whichever is greater).11
Legal defenses against charges of laundering controlled substance proceeds
If you are charged with California money laundering of drug crime proceeds under California Health & Safety Code 11370.9, a good California criminal defense attorney can help you find the best legal defenses for getting the charges reduced or dismissed altogether.
One potential defense is that you did not engage in the transaction in order to conceal the source or ownership of the funds.12
Example: Terry has just learned that she has cancer. She has no health insurance and is facing massive treatment costs.
Reluctantly, Terry asks her brother Steve for help. Steve has made millions of dollars manufacturing drugs like methamphetamine—and Terry is aware of this. Steve writes Terry a check for $100,000 to help with her medical bills, and Terry deposits it.
Terry did not accept the money because she wanted to help Steve disguise the fact that it came from drugs. Therefore, she is not guilty under Health & Safety Code 11370.9. (Unfortunately, though, she could still be charged under PC 186.10, the more general money laundering law.13)
Another is that you were the victim of police misconduct.
Police often rely on complicated undercover operations to make money laundering arrests. These operations sometimes lead to forms of misconduct such as searches without a valid California search warrant or probable cause.
If this occurs, your attorney may be able to file a motion to suppress evidence that was obtained as part of an illegal search.
Finally, depending on the facts of your case, you may be able to argue that the money was not actually derived from a drug offense—or that the amount of “dirty” money that was laundered did not exceed the minimum amount of $25,000.
Call us for help…
For questions about the California crime of money laundering in connection with a controlled substance offense, Health & Safety Code 11370.9 HS, or to discuss your case confidentially with one of our California criminal defense attorneys, do not hesitate to contact us at Shouse Law Group.
We have local criminal law offices in and around Los Angeles, San Diego, Orange County, Riverside, San Bernardino, Ventura, San Jose, Oakland, Sacramento, the San Francisco Bay area, and several nearby cities.
Legal References:
1 Health & Safety Code 11370.9 HSC – Proceeds over $25,000 derived from controlled substance offenses; penalties [money laundering in connection with drug crimes]. (“(a) It is unlawful for any person knowingly to receive or acquire proceeds, or engage in a transaction involving proceeds, known to be derived from any violation of this division or Division 10.1 with the intent to conceal or disguise or aid in concealing or disguising the nature, location, ownership, control, or source of the proceeds or to avoid a transaction reporting requirement under state or federal law. (b) It is unlawful for any person knowingly to give, sell, transfer, trade, invest, conceal, transport, or maintain an interest in, or otherwise make available, anything of value which that person knows is intended to be used for the purpose of committing, or furthering the commission of, any violation of this division or Division 10.1 with the intent to conceal or disguise or aid in concealing or disguising the nature, location, ownership, control, or source of the proceeds or to avoid a transaction reporting requirement under state or federal law. (c) It is unlawful for any person knowingly to direct, plan, organize, initiate, finance, manage, supervise, or facilitate the transportation or transfer of proceeds known to be derived from any violation of this division or Division 10.1 with the intent to conceal or disguise or aid in concealing or disguising the nature, location, ownership, control, or source of the proceeds or to avoid a transaction reporting requirement under state or federal law. (d) It is unlawful for any person knowingly to conduct a transaction involving proceeds derived from a violation of this division or Division 10.1 when the transaction is designed in whole or in part to conceal or disguise the nature, location, source, ownership, or control of the proceeds known to be derived from a violation of this division or Division 10.1 with the intent to conceal or disguise or aid in concealing or disguising the nature, location, ownership, control, or source of the proceeds or to avoid a transaction reporting requirement under state or federal law. . . . (h) For the purposes of this section, the following terms have the following meanings: (1) ‘Proceeds’ means property acquired or derived directly or indirectly from, produced through, or realized through any violation of this division or Division 10.1.”)
2 Penal Code 186.10 PC – Money laundering; elements; violations; punishment; pleadings. (“(a) Any person who conducts or attempts to conduct a transaction or more than one transaction within a seven-day period involving a monetary instrument or instruments of a total value exceeding five thousand dollars ($5,000), or a total value exceeding twenty-five thousand dollars ($25,000) within a 30-day period, through one or more financial institutions (1) with the specific intent to promote, manage, establish, carry on, or facilitate the promotion, management, establishment, or carrying on of any criminal activity, or (2) knowing that the monetary instrument represents the proceeds of, or is derived directly or indirectly from the proceeds of, criminal activity, is guilty of the crime of money laundering.”)
3 Health & Safety Code 11370.9 HSC – Proceeds over $25,000 derived from controlled substance offenses; penalties [money laundering in connection with drug crimes], endnote 1, above.
4 Same.
5Health & Safety Code 11370.9 HSC – Proceeds over $25,000 derived from controlled substance offenses; penalties [money laundering in connection with drug crimes]. (“(f) This section shall apply only to a transaction, or series of related transactions within a 30-day period, involving over twenty-five thousand dollars ($25,000) or to proceeds of a value exceeding twenty-five thousand dollars ($25,000).”)
6 Torrance criminal defense lawyer John Murray comments on criminal law issues for the Fox News Channel and practices criminal law, including defending clients accused of money laundering, throughout Los Angeles County, Orange County, and Ventura County.
7 Penal Code 186.10 PC – Money laundering; elements; violations; punishment; pleadings, endnote 2, above.
8 Health & Safety Code 11370.9 HSC – Proceeds over $25,000 derived from controlled substance offenses; penalties [money laundering in connection with drug crimes]. (“(e) A violation of this section shall be punished by imprisonment in a county jail for not more than one year or in the state prison for a period of two, three, or four years, by a fine of not more than two hundred fifty thousand dollars ($250,000) or twice the value of the proceeds or property involved in the violation, whichever is greater, or by both that imprisonment and fine. Notwithstanding any other provision of law, each violation of this section shall constitute a separate, punishable offense without limitation.”)
9 Same.
10 Same.
See also Penal Code 672 PC. (“Upon a conviction for any crime punishable by imprisonment in any jail or prison, in relation to which no fine is herein prescribed, the court may impose a fine on the offender not exceeding one thousand dollars ($1,000) in cases of misdemeanors [including misdemeanor drug money laundering] or ten thousand dollars ($10,000) in cases of felonies, in addition to the imprisonment prescribed.”)
11 Same.
12 Health & Safety Code 11370.9 HSC – Proceeds over $25,000 derived from controlled substance offenses; penalties [money laundering in connection with drug crimes], endnote 1, above.
13 Penal Code 186.10 PC – Money laundering; elements; violations; punishment; pleadings, endnote
2, above.