PHOENIX — The Arizona Supreme Court on Wednesday blocked state prosecutors from seizing wire transfers of money from other states to Mexico until the sender proves it comes from a legal source.
In a setback for Attorney General Terry Goddard, the justices rejected his argument that prosecutors don't have to show a connection between a criminal enterprise operating in Arizona and the money.
Justice Andrew Hurwitz, writing for the majority, said he understands Goddard's arguments that the warrants are necessary to interrupt the flow of money into Mexico by those involved in human smuggling and narcotics trafficking in Arizona. But Hurwitz said Goddard's goals, "however noble," can't justify an illegal act.
Wednesday's ruling throws a legal roadblock into Goddard's efforts to use "damming warrants." The procedure allows state prosecutors to get a court order to "dam" all wire transfers meeting certain criteria until the person for whom the money is intended can show it is for a legal purpose.
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Goddard said, though, he still believes, despite Wednesday's ruling, his office will be able to seek future warrants. He said the decision still leaves other legal avenues open.
But Cameron Holmes, senior litigation counsel for the Attorney General's Office, said it will require prosecutors to provide more evidence than they have in the past to get the cash.
The lawsuit started after Goddard's office convinced a Maricopa County Superior Court judge in 2006 to let him seize person-to-person wire transfers of $500 or more sent from 28 other states to certain locations northern of Sonora, Mexico. The warrant directed Western Union not to pay the money to the recipients, but instead put it into a special account.
Intended recipients had to call police who then questioned them to determine whether to allow the transfer to be paid. Goddard's office had seized about $200,000 from about 250 transactions before being blocked by a trial judge.
The Supreme Court on Wednesday agreed with the trial court that unless Goddard could show the money actually passed through Arizona the warrants were issued illegally.
Goddard argued unsuccessfully that any company that does business in Arizona is subject to the "general jurisdiction" of state courts, and the money being held by Western Union is a debt that is owed wherever the company is located. But the court held that the presence of a company here is not enough to assert jurisdiction over funds that originated and were delivered elsewhere.
Hurwitz did agree with Goddard that there are alternative procedures to allow pursuit of the profits of those who engage in illegal activity. But the justice said even in those cases, prosecutors must show "minimum contacts between those with interests in the subject funds and the state of Arizona."
Western Union spokesman Tom Fitzgerald said his company remains willing to work with the state to combat illegal activity. But he said his company also has to protect the interests of its consumers and protect legitimate business activity.
