Federal authorities recently announced the arrest and indictment of a national network of catalytic converter thieves who pocketed hundreds of millions of dollars in profits from the crimes. The government is now using forfeiture proceedings to recover as much as $545 million from some of those accused.
At Stechschulte Nell, Attorneys at Law, we think that everyone has the right to the zealous defense of a skilled criminal defense attorney when the government accuses them of a crime. When zealous, smart criminal defense attorneys represent every defendant, we can be confident that no American is being denied genuine justice in our courts.
In this blog, we’ll look at the growth of catalytic converter theft, review what laws these defendants are accused of violating, and consider whether the forfeiture process is being properly used in this and other cases. We’ll also explain how an experienced criminal defense lawyer can defend these charges in federal court. If you or your family member are facing federal criminal charges, contact Stechschulte Nell in Tampa for immediate legal help and experienced criminal defense representation.
What Is a Catalytic Converter?
A catalytic converter is a cylindrical piece of equipment in the exhaust system of automobiles that’s about 18 inches long. Catalytic converters separate many of the harmful compounds in the gases being produced by the internal combustion engine in most cars. The gas enters the catalyst chamber and heavy metals are used to change the gas composition, resulting in a cleaner, steam-like exhaust.
Why Are People Stealing Catalytic Converters?
Catalytic converter theft has increased tenfold in the past few years according to the Nation Insurance Crime Bureau. The COVID-19 pandemic caused most of the world’s industries to stop or reduce normal operations to a crawl since 2019, including mining companies that produce precious metals needed for the manufacture of more catalytic converters for new cars and medical devices.
Catalytic converters contain valuable platinum, palladium, and rhodium. As China and other countries implement eco-friendly standards for automobiles, the auto industry needs more of these metals to make catalytic converters. When the pandemic reduced the production of these metals, their value skyrocketed: high demand and low supply. Scrap yards pay well for catalytic converters so the metals can be extracted and resold.
To give you an idea of the value of these metals, remember that the price of gold in late 2022 is about $1,773 per ounce. The price of Rhodium is $28,000 per ounce.
Easy Access and Quick Removal of Catalytic Converters
The U.S. Justice Department alleges that the leaders of the catalytic converter theft ring in nine states conspired to and did transport stolen converters across state lines, and conspired to and did launder money, in addition to other related offenses. The operation enlisted young people across the country to steal the converters. The converters are easily accessed by slipping under the car and removing it from within the exhaust system by quickly cutting each end. The entire process takes about 3 minutes.
While many converters were taken from cars parked in residential driveways in the middle of the night, others were obtained in daring raids on large auto dealers during which hundreds of converters could be stolen in a single night.
The average cost to replace a catalytic converter is about $2,000.
What Federal Crimes Do Catalytic Converter Rings Face?
#1. Federal statute 18 U.S.C. § 2314 prohibits knowingly transporting stolen property valued at $5,000 or more over state lines.
18 U.S.C. § 2315 sets the penalty for violating this statute at up to 10 years in federal prison and a fine, for each count.
#2. Federal statute 18 U.S.C. § 1956 makes it a federal crime to launder money. Money laundering is identified as conducting any financial transaction which the person knows involves proceeds from criminal conduct with the intent to a) carry on a specified criminal activity, b) evade taxes, c) disguise the illegal origin of the money, or d) avoid compliance with federal financial reporting requirements.
The law also prohibits conspiring or attempting to commit these offenses.
18 U.S.C. § 1956 (a)(1)(B) sets the penalty for federal money laundering at up to 20 years in federal prison and a fine of up to $500,000 or twice the value of the money laundered, whichever is greater.
Defenses to Federal Crimes
The expertise of a veteran federal criminal defense attorney is the most valuable resource a federal defendant can reach for to avoid or minimize the likelihood of spending years in federal prison. Let’s look at some of the possible defenses an experienced criminal lawyer can raise in each of the crimes noted above:
Interstate Transportation of Stolen Property (and Conspiracy) — The federal government would need to prove every element of the crime beyond a reasonable doubt. In this case, a viable defense could include any of the following, depending on the facts of the individual case:
- Failure to prove knowledge that property was stolen
- Purchased property in good faith
- Believed owners authorized transportation
- No knowledge goods crossed state lines
- Value less than $5,000
- No intentional agreement with one or more others to knowingly transport stolen goods
- Evidence obtained through illegal search
- Illegal wiretap
Of course, these are only several possible points on which to attack the government’s case against a defendant in cases involving alleged interstate transportation of stolen goods.
Money Laundering (and Conspiracy) — Money laundering and conspiracy to launder money require the government to prove the defendant’s specific knowledge that the money involved in the alleged laundering transaction was proceeds from criminal activity, and that their intent was to either
- carry on a specific criminal activity, or
- evade taxes, or
- disguise the illegal origin of the money, or
- avoid the federal law obliging the transaction to be reported.
Experienced federal criminal defense lawyers focus on the government’s difficulty in proving money laundering charges in the element of intent:
- Defendant did not know the transaction involved proceeds of crime
- Defendant relied on the representation of others about the legal origin of the money
- The money was not proceeds of crime
- Defendant acted ministerially and without notice of any illegal proceeds
- Defendant acted under duress/fear of injury or death
- Evidence obtained in an illegal search
Again, these are merely a sample of the defenses available to a defendant whose federal criminal defense lawyer understands the statutes and procedures at work in the federal court system.
Federal Crime Defense