Second Circuit Reverses Money Transmitting Conviction

In another case that highlights the importance of jury instructions to a successful white collar defense, the Second Circuit vacated and remanded the conviction of a man on charges of knowingly operating an “unlicensed money transmitting business” under 18 U.S.C. Section 1960. Section 1960 prohibits, among other things, knowingly conducting a money transmitting business. Under the statute, “money transmitting” is defined as “transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier.” An “unlicensed money transmitting business” includes “a money transmitting business that affects interstate or foreign commerce in any manner or degree and…is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law.”

Appellant Bah owned a licensed money transmitting business in New Jersey. He also owned a separate business in New York. Bah was prosecuted for transmitting money out of New York without a New York license. New York Banking Law Section 650 requires licensing for “[i] engag[ing] in the business of receiving money for transmission or [ii] transmitting the same.” Bah contended at trial that while he received money for transfer in New York, he only transferred it out of New Jersey, where he was licensed. Bah asked for the following jury instruction: “1960 does not make it unlawful to receive money for transmission without a license.”

The Government objected to the proposed jury charge and the trial court refused to include it. The trial court reasoned that if Bah violated New York law by engaging in the business of “receiving money for transmission” without a license, he had, by virtue of that fact alone, violated 18 U.S.C. Section 1960.

The Second Circuit disagreed, in an opinion by Chief Judge Dennis Jacobs, holding that the New York law could not broaden federal criminal law.  Section 1960 only prohibits engaging in the business of transmitting money without an appropriate state license, and does not mention or cover the mere receipt of money for such transmission. Under the trial court’s instructions, the jury may have convicted Bah even if they believed his story that he received the money for transmission in New York, but transferred it out of New Jersey. Since such a defense would have been entirely valid, the judgment of conviction had to be vacated and remanded.

The case, decided Wednesday, is United States v. Bah.