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Name: People v. Lee
Case #: A145038
Court: CA Court of Appeal
District 1 DCA
Division: 5
Opinion Date: 05/02/2017

Money laundering convictions were not supported by sufficient evidence because a personal check made payable to the order of a named party is not a “monetary instrument” (Pen. Code, § 186.10). Lee, who was a tax consultant, took substantial amounts of money from his clients for “investment clubs,” but did not invest their money as promised. Instead he used the money for his own personal expenses. He was convicted of numerous theft and theft-related offenses arising out of his conduct. On appeal he challenged his money laundering convictions (§ 186.10) claiming that his withdrawal of client funds from his account via a person check made out to a designated payee, did not involve a “monetary instrument” as required by the statute. Held: Four money laundering counts reversed. The money laundering statute prohibits a person from promoting criminal activity or engaging in transactions with the proceeds of criminal activity, involving a monetary instrument exceeding $5,000 within a seven-day period or $25,000 within a 30-day period. “Monetary instrument” includes U.S. currency and a personal check in bearer form, i.e., in a form in which title passes upon delivery. But a monetary instrument does not extend to personal checks made payable to a named party which have not been endorsed or which bear restrictive endorsements, nor personal checks which have been endorsed by the named party and deposited into the named party’s account in a financial institution (§ 186.9, subd. (a)). As to four of the money laundering counts, the evidence shows that Lee’s clients wrote him personal checks which he deposited into his bank account; the funds were withdraw when Lee wrote personal checks from the same account to specific payees. These transactions did not involve “monetary instruments” within the meaning of the statute.

The evidence was insufficient to support Lee’s convictions for identity theft because it failed to show that Lee used his victim’s information for any unlawful purpose. The jury convicted Lee of 20 counts of identity theft. The identity theft statute prohibits a person from willfully obtaining personal identifying information belonging to someone else, using that information for an unlawful purpose, such as to obtain credit, goods, services, or medical information, without the consent of the person whose personal information is being used (Pen. Code, § 530.5, subd. (a)). It is clear that Lee willfully obtained his victims’ identifying information when he convinced them to write him checks or wire money to him, which resulted in Lee obtaining their personal identifying information. However, the fact that Lee deposited his victims’ checks into his account does not constitute using the information for an unlawful purpose. What rendered Lee’s conduct unlawful was his failure to invest the money as promised. Further, each person who gave Lee a check containing personal identifying information consented to his negotiating the check and having the funds deposited into his account. While Lee stole from his clients when he did not use the money as promised, his did not use his clients’ information without their consent.