The mastermind of a major mortgage fraud conspiracy in North Carolina was able to shed his money laundering convictions with a merger argument. In United States v. Cloud, the Fourth Circuit held today that money laundering convictions premised on the payment of money to third parties simply to cover essential operating expenses for the underlying fraud merged into the underlying fraud and could not be punished under a since-amended federal money laundering statute. Judge Diaz wrote the opinion for the court, in which Judge Gregory and Judge Davis joined.
This decision in Cloud rests on the Fourth Circuit’s decision in United States v. Halstead, 634 F.3d 270 (4th Cir. 2011). That case sets forth Fourth Circuit’s interpretation of the Supreme Court’s 4-1-4 decision in United States v. Santos, 553 U.S. 507 (2008).