Unilateral Conspiracy and Money Laundering

North Carolina is a bilateral conspiracy jurisdiction. Defining conspiracy as a combination of two or more persons to do an unlawful thing means that if the only other participant is an undercover officer or an informant – that is, one who lacks criminal intent – then there is no conspiracy. Under a new statute effective December 1, 2024, however, it is no defense to conspiracy to commit money laundering that the person with whom the defendant is alleged to have conspired was a law enforcement officer or acting at the direction of a law enforcement officer. G.S. 14-118.8(i). The new statute thus adopts the unilateral approach to conspiracy taken by the Model Penal Code and some other states. This post considers the new statute and its innovation in the law of conspiracy.

Bilateral Conspiracy

The crime of conspiracy was unknown to the early common law but originated with three statutes enacted during the reign of Edward I (c. 1300). 2 Wayne R. LaFave, Substantive Criminal Law, § 12.1(a) (3rd ed. 2024). By the time of the American Revolution, any agreement to commit any offense was punishable under the common law as a conspiracy. Id.; cf. State v. Arnold, 329 N.C. 128, 142, (1991) (“a common law offense”); State v. Younger, 12 N.C. 357, 358 (1827) (same). Hence, a criminal conspiracy is an agreement between two or more people to do an unlawful act or do a lawful act in an unlawful manner. State v. Winkler, 368 N.C. 572, 575 (2015).

Unlike the formal agreement required for contract, however, conspiracy may be shown by a mutual implied understanding. State v. Beck, 385 N.C. 435, 439 (2023). The conspiracy is the crime and not its execution; hence, no overt act is necessary. State v. Gibbs, 335 N.C. 1, 47 (1993). Still, under the traditional rules of conspiracy, there must be a plurality of intent. “One person cannot conspire with himself.” State v. Horton, 275 N.C. 651, 657 (1969). Consequently, if only one party to the agreement has the requisite mental state, then that one person is not guilty of conspiracy. See State v. Melton, 371 N.C. 750, 762 n.3 (2018); 2 LaFave, Substantive Criminal Law, § 12.2(c)(6).

One consequence of this rule is that, when one of two alleged conspirators is a police officer who “intends to frustrate the conspiracy, the other person cannot be convicted of conspiracy.” State v. Hammette, 58 N.C. App. 587, 589 (1982). In Hammette, the defendant was awarded a new trial because the trial court erroneously instructed the jury that he could be convicted if he conspired only with an undercover agent. Id. Another consequence of the rule is that, if all other codefendants in a conspiracy prosecution are acquitted, a conviction against the sole remaining defendant must be set aside. State v. Saunders, 126 N.C. App. 524, 527 (1997); cf. State v. Soles, 119 N.C. App. 375 (1995) (conviction will be upheld when all alleged coconspirators are acquitted in a separate subsequent trial). The rationale is that there is no one left with whom the remaining party could have agreed.

Money Laundering

Until recently, there was no state statute specifically criminalizing money laundering. Effective December 1, 2024, however, G.S. 14-118.8 makes it a felony for any person knowingly and willfully to possess, transfer, or transport the proceeds of criminal activity. G.S. 14-118.8(b). Criminal activity is defined as an offense (1) classified under North Carolina or federal law as a felony, or (2) punishable by imprisonment for more than one year under the laws of another state. Id. at (a)(1). Proceeds of criminal activity means funds (expansively defined) acquired or derived from, produced or realized through, or used in the commission of criminal activity. Id. at (a)(5).

A person commits money laundering not only by possessing, transferring, or transporting the proceeds of criminal activity, but also if the person (1) acquires, maintains an interest in, or conceals, the proceeds; (2) conducts, supervises, or facilitates a transaction (expansively defined) involving the proceeds; (3) invests, expends, or receives (or offers to do the same) the proceeds; (4) finances or invests, or intends to finance or invest, funds that the person believes are intended to further criminal activity; or (5) uses, transports, transmits, or transfers the proceeds (or conspires or attempts the same) with the intent to conceal or disguise the nature, location, source, ownership, or control of the proceeds; (6) uses the proceeds with the intent to promote criminal activity; or (7) conducts or attempts to conduct a transaction involving the proceeds with the intent to avoid a transaction reporting requirement under federal law. G.S. 14-118.8(b). To establish guilt, the State must prove the defendant’s knowledge of “the nature of the criminal activity.” Id. at (c). As for punishment, the offense is a Class C felony if the value of the proceeds or funds is $100,000 or more and a Class H felony if the value is less than $100,000. Id. at (e).

Like G.S. 14-86.6 (organized retail theft), G.S. 14-118.8 has a provision for aggregation. If the proceeds are related to “one scheme or continuing course of conduct,” the conduct may be considered as one offense and the value aggregated in determining the class of the offense. G.S. 14-118.8(g). At the same time, however, G.S. 14-86.6 provides that each violation “constitutes a separate offense and shall not merge with any other offense.” Id. at (h); cf. State v. Applewhite, 386 N.C. 431, 436 (2024) (examining anti-merger clause in human trafficking statute, G.S. 14-43.11). The combination of these two provisions appears to leave the determination of whether to treat multiple violations of the money laundering statute as one offense (for purposes of aggregation) or as many (under the anti-merger clause) in the discretion of the prosecutor. Cf. State v. Mullaney, 129 N.C. App. 506, 512 (1998) (Greene, J., concurring in result, joined by Timmons-Goodson, J.) (for purposes of embezzlement, “[t]he choice of how to proceed is with the prosecutor.”).

Conspiracy is generally punished as an offense one class lower than the felony that the defendant conspired to commit. G.S. 14-2.4. But under G.S. 14-118.8, a person who conspires to commit money laundering is guilty as provided for the principal offense. G.S. 14-118.8(i); cf. G.S. 90-98 (same for drug offenses). Further, for purposes of money laundering, it is not a defense to conspiracy “that the person with whom the defendant is alleged to have conspired was a law enforcement officer or a person acting at the direction of a law enforcement officer.” Id. at (i). The new statute thus adopts a unilateral approach to conspiracy hitherto unknown to our common law.

Unilateral Conspiracy

As noted above, the Model Penal Code adopts a unilateral approach, defining conspiracy to require an agreement by the defendant but not agreement between two or more persons. Model Penal Code § 5.03(1). Most modern codes similarly define conspiracy in terms of a single actor. See LeFave, Substantive Criminal Law, § 12.2(a) (collecting statutes). But in North Carolina, conspiracy is not defined by statute; it remains a common law offense. State v. Arnold, 329 N.C. 128, 142, (1991). The conspiracy provision of G.S. 14-118.8 thus represents a discrete exception for a single crime.

Moreover, G.S. 14-118.8 does not go so far as the Model Penal Code in redefining the offense of conspiracy even in the context of money laundering. To be sure, application of the statute would compel a different result than was reached in Hammette, which reversed the defendant’s conviction where the jury could have found him guilty of “conspiring” with an undercover officer. Hammette, 58 N.C. App. at 589. But the statute says nothing about the acquittal during a single trial of every other alleged conspirator. The requirement for a plurality of intent might prevail in that scenario.

The conspiracy provision of G.S. 14-118.8 will be of the most interest to prosecutors. The offense of money laundering is defined expansively to criminalize virtually any knowing involvement with the proceeds of criminal activity. By eliminating an element of common law conspiracy, the statute makes it easier to prosecute all those who deal in dirty money, even if the other smurf is a rat.