United States v. Nelson

The federal government (plaintiff) prosecuted Kevin Lee Nelson (defendant) for conspiracy and for attempted money laundering, in violation of 18 U.S.C. § 1956(a)(3)(C). The federal district court trial evidence established that undercover Internal Revenue Service (IRS) agents told William Rahlf, a car salesman, that they wanted to buy a Toyota 4-Runner for $22,000 in cash, which they said came from illegal drug deals. Rahlf responded that his dealership had sold cars to other drug dealers for cash only, and would be glad to do so again. Nelson, who was Rahlf's sales manager, suggested to Rahlf and the agents that they structure the purchase terms to evade 26 U.S.C. § 6050(I)(a)'s requirement that a retail business notify the IRS of any transaction involving the receipt of more than $10,000 in cash. Nelson suggested reporting to the IRS but giving false names for the buyers. Alternatively, Nelson suggested that the agents buy two cars, each for less than $10,000, and then trade them in for the 4-Runner, thereby lowering the 4-Runner's net purchase price below the statutory reporting threshold. Nelson and Rahlf disclosed Nelson's ideas to superiors, who nixed both schemes. IRS agents later arrested the two men. The jury convicted Nelson and Rahlf. Nelson appealed to the Ninth Circuit Court of Appeals. The court affirmed Nelson's conspiracy conviction before turning to his conviction for attempted money laundering.