Money Laundering—Joseph M. Medawar

A federal grand jury has indicted a Hollywood producer on charges that he swindled millions of dollars from dozens of people who invested in a phantom television series based on the US Department of Homeland Security [hereinafter DHS].^[1] Joseph M. Medawar faces ten counts of money laundering, five counts of mail fraud, six counts of wire fraud, and two counts of obstructing justice.^[2]

Mr. Medawar is accused of shopping an idea for a DHS series beginning in 2003, persuading Congressmen Christopher Cox and Dana Rohrabacher to provide advice on how to make the show more realistic.^[3] Film scenes were shot at the Orange County Sheriff’s Department for a promotional video, and Mr. Medawar even made a number of political donations that earned him access to high-profile, invitation-only Republican Party events.^[4] Prosecutors allege, however, that Mr. Medawar used those connections to convince investors to purchase stock in his company, telling them that an investment bank was preparing an initial public offering, that his company was valued at more than $200 million, that he had the backing of President Bush and the DHS, and that 26 episodes were in post-production.^[5] Prosecutors allege that all of Mr. Medawar’s representations were lies, and that the money actually when into supporting his own lavish lifestyle.^[6]

In addition, prosecutors reached a plea agreement with Mr. Medawar’s former chief financial officer, Jeffrey Rosenberg.^[7] Mr. Rosenberg, who worked for Mr. Medawar at Steeple Entertainment Ltd., pleaded guilty to one count of failing to report mail fraud and acknowledged that he had concealed the alleged scam and that he had lied to federal investigators; in exchange for his plea, Mr. Rosenberg will testify against Mr. Medawar.^[8]

Money Laundering
Mr. Medawar is charged with money laundering under two different statutes. The first is 18 U.S.C. § 1956(a)(1)(A)(i), and the second, which doesn’t get discussed very often, is 18 U.S.C. § 1957(a).

Under section 1956(a)(1)(A)(i), it is a crime for a person to engage in a financial transaction involving the proceeds of specified unlawful activity with the intent of promoting “the carrying on” of that activity. The person must know that the financial transaction involves the proceeds of specified unlawful activity. The specified unlawful activity in this case is mail and wire fraud.^[9]

The punishment for a violation of section 1956(a) is a fine of not more than $500,000 “or twice the value of the property involved in the transaction, whichever is greater,” up to 20 years in prison, or both.

Under section 1957(a), it is a crime for a person to knowingly engage in a monetary transaction in criminally derived property having a value greater than $10,000 and which is derived from specified unlawful activity. In this case, the specified unlawful activity is engaging in mail and wire fraud.

The punishment for a violation of section 1957(a) is a fine, imprisonment for not more than ten years, or both.^[10] The Court can, in its discretion, impose an alternate fine of not more than twice the amount of the criminally derived property involved in the transaction.^[11]

Mail Fraud and Wire Fraud
We have previously discussed mail and wire fraud here.

Obstruction of Justice
Under 18 U.S.C. § 1505, it is a crime for a person to corruptly obstruct or impede the due and proper administration of the law under which any pending proceeding is being had before any department or agency of the United States.

The punishment for a violation of section 1505 is a fine, imprisonment for up to 5 years, or both.

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[1] Christine Hanley et al., U.S. Jury Indicts Man Accused of TV Series Scam, L.A. Times, Oct. 21, 2005, available here.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] 18 U.S.C. §1956(c)(7)(A) (incorporating by reference the definition of an offense under 18 U.S.C. § 1961(1).
[10] Id. § 1957(b)(1).
[11] Id. § 1957(b)(2).