Multiple Alerts by Drug Dog to Suspect's Cash Deposits Help Prove Money Laundering

I have read dozens of currency sniff cases—prosecutions where a dog alerts to currency found in the suspect’s luggage, or car, or somewhere else near or on him. The government then seeks to forfeit the currency, arguing that it is the product of narcotics activity. If narcotics are also found on the suspect, the government, whether state or federal, will almost always win. If nothing else incriminating is found, the suspect may get his money back if he can convince the court that the only reason for the dog’s alert is that there is cocaine residue on much of the currency in circulation. Convincing a judge that this is the only reason for the alert has become a little harder since a 2005 case from the Seventh Circuit, U.S. v. $30,670, 403 F.3d 448, where the court discussed the fact that many studies have indicated that dogs do not detect cocaine residue indefinitely and that an alert probably means that the drug contact was fairly recent.

What I have not seen often in currency sniff cases is a dog being used repeatedly in an investigative stage. One exception is People v. Sommer, 16 Cal.Rptr.2d 165 (Court of Appeal, 6th Dist. 1993), an appellate decision in California involving money laundering. The case began In May 1990, when Gayle Ann Sommer opened an account at the Great Western Bank in Salinas with an initial cash deposit of $2,000. In June and July, she began to make cash deposits of amounts like $6,775.92, $5,000, $9,000, $9,000, $9,000, $9,000, $8,000, and so on. These amounts, for anyone who has studied money laundering cases, are immediately suspicious because it appears that the accountholder is trying to avoid making cash deposits of $10,000, the threshold for filing Currency Transaction Reports (CTRs). CTRs are filed with the Detroit Computing Center of the IRS and analyzed by the Financial Crimes Enforcement Network, which looks for patterns that may indicate that an accountholder is trying to launder money—i.e., to turn dirty money (such as money from drug deals) into clean money that can be used for other purposes without suspicion. When a suspect makes numerous deposits below the reporting threshold, the pattern is called “structuring,” and Gayle Ann Sommer came under suspicion by the bank, which began to segregate the deposits for the police.

The police had a dog named Star, a three-year old German Shepherd that had been trained to alert to the odors of cocaine, heroin, marijuana, and methamphetamine. Star alerted by sitting down. Star was put before a deposit Sommer had made of $8,000, and alerted. Five days later, Star alerted to a $20,000 cash deposit (Sommer exceeded the $10,000 threshold because of a real estate deal she needed to close). Star then alerted to deposits of $5,000 and $4,000 on other dates. In September of 1990 police obtained a warrant and searched Sommer’s house, and they brought Star along. She alerted to a bedroom nightstand drawer in which were several bundles of currency. She alerted to a purse with currency inside. No drugs were found, however.

Gayle Ann Sommer was convicted of money laundering based on the patterns of her financial activities. She appealed her conviction, arguing that Star’s alerts should not have been admitted. Testimony of Star’s trainer established that she was not permitted to go into the field until she had stopped false alerting in training trials, but he admitted that she had made some false alerts during training. Star’s handler testified that Star had logged over 100 hours of narcotics training searches in the previous year. She was trained using narcotics that had been tested by the Department of Justice lab for narcotic content. She was also tested on currency. This was done by placing narcotics and currency in a manilla envelope for about a day then removing the narcotics. Star would have to alert to both the currency and the narcotics, which were hidden in different places. Star had been used in 40 cases, some of which involved only currency.

The appellate court determined that the evidence concerning Star’s alerts was not irrelevant and that the jury was properly instructed on the weight that could be given the canine sniff. The cash that had been deposited at the ban was not preserved indefinitely but released to the bank without forensic tests being performed. In the words of an investigator, a decision was made to let the evidence walk. Testimony of prosecution witness had noted that dogs often alert to items on which no drug residue is actually found. The appellate court determined that this was not a denial of due process.

The conviction was affirmed. The number of alerts might have impressed the jury, as it did me. It does suggest that dogs might be more useful in money laundering investigations where the source of the funds is not being established during an investigation of a suspect’s financial activities.

For another case where a dog reacted to three cash deposits, see U.S. v. South Side Finance, Inc., 755 F.Supp. 791 (N.D. Ill. 1991). South Side Finance was using accounts at Marquette National Bank and came under scrutiny because 354 of the deposits were just below the $10,000 reporting requirement for currency transaction reporting. This a red flag in the financial services industry, indicating the possibility that South Side was structuring deposits to avoid suspicion.