## Facts

- Undercover IRS agents, posing as drug dealers, sought to buy a Toyota 4-Runner for $22,000 in cash and represented the cash as drug proceeds.
- Dealership salesman William Rahlf indicated the dealership had sold cars to drug dealers for cash and would do so again.
- Kevin Lee Nelson, the dealership’s sales manager, proposed methods to structure the transaction to avoid federal cash-transaction reporting requirements under 26 U.S.C. § 6050I.
- Nelson suggested either (1) filing a report using false buyer names or (2) having the agents buy two cars for under $10,000 each and then trade them in to reduce the net price of the 4-Runner below the reporting threshold.
- Dealership superiors rejected both proposed schemes, and no sale occurred under either plan.
- Nelson was charged and convicted by a jury of conspiracy and attempted money laundering under 18 U.S.C. § 1956(a)(3)(C), then appealed.

## Issues

1. Whether Nelson’s proposals to structure the transaction to avoid reporting requirements constituted a “substantial step” sufficient to support an attempted money laundering conviction under 18 U.S.C. § 1956(a)(3)(C).
2. Whether the district court erred in instructing the jury on attempt by failing to define “substantial step” as an appreciable fragment of the crime that strongly corroborates criminal intent.

## Decision

- The Ninth Circuit affirmed the conspiracy conviction.
- The Ninth Circuit reversed the attempted money laundering conviction for insufficient evidence of a substantial step.
- The court concluded Nelson’s conduct amounted to planning and suggestions that were never implemented and did not progress beyond preparation.

## Legal Principles

- Attempt requires proof of intent plus a “substantial step” toward completion of the offense.
- A “substantial step” must go beyond mere preparation and must be conduct that strongly corroborates the firmness of the defendant’s criminal intent; it must amount to an appreciable fragment of the crime.
- Under 18 U.S.C. § 1956(a)(3)(C), attempted money laundering in a sting setting requires objective steps toward conducting a financial transaction involving property represented as criminal proceeds, undertaken with intent to avoid a state or federal reporting requirement.

## Conclusion

The Ninth Circuit held that Nelson’s agreement and participation in planning supported conspiracy, but his unexecuted suggestions for evading reporting requirements did not constitute the substantial step required for attempted money laundering, so the attempt conviction was reversed.


United States v. Nelson, 66 F.3d 1036 (9th Cir. 1995)