ILNews

SCOTUS defines money-laundering 'proceeds'

Michael W. Hoskins
January 1, 2008
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The Supreme Court of the United States has defined money laundering and tossed out the convictions of an East Chicago man in a split decision today.

The high court ruled on U.S. v. Efrain Santos, et al., No. 06-1005, which involved a money-laundering ring in East Chicago. This was one of two money-laundering cases decided by the court today; the other came in Cuellar v. U.S., No. 06-1456, which held that mere concealment of money during a transport is not enough to support a conviction for money laundering.

In Santos, a majority of justices held that "proceeds" according to the federal money-laundering statute applies only to transactions involving criminal profits, not the total amount of money.

Justices applied a narrow interpretation that authoring Justice Antonin Scalia said will not unduly burden the federal government and law enforcement agencies, who must show only that a single instance of unlawful activity was profitable.

The court applied the rule of lenity that favors defendants, not prosecutors, as it pondered the statute and reflected on the word "proceeds."

"Under either of the word's ordinary definitions, all provisions of the federal money-laundering statute are coherent; no provisions are redundant and the statute is not rendered utterly absurd," the opinion states. "From the face of the statute, there is no more reason to think that 'proceeds' means 'receipts' than there is to think that 'proceeds' means 'profits.' Under a long line of our decisions, the tie must go to the defendants. Because the 'profits' definition of 'proceeds' is always more defendant-friendly than the (other) definition, the rule of lenity dictates that it should be adopted."

But in a dissenting opinion - with which Chief Justice John Roberts and Justices Anthony Kennedy and Steven Breyer concurred - Justice Samuel Alito wrote, "Concluding that 'proceeds' means 'profits,' the plurality opinion's interpretation would frustrate Congress' intent and maim a statute that was enacted as an important defense against criminal enterprises."

Specifically, the Santos case involves the federal prosecution of a tavern lottery raid where Santos - known as "Puerto Rican Frankie" - was arrested for running the illegal operation throughout the region from the 1970s to 1994. He was sentenced to 17 years in prison in 1998, but was released after the 7th Circuit issued rulings that changed the interpretation of money laundering. Following those decisions, U.S. District Judge James Moody in Hammond ruled that Santos' actions were no longer considered money laundering because of an interpretation of "net proceeds" and "gross proceeds" in federal laws.

Indianapolis lawyer Todd Vare with Barnes & Thornburg argued before the high court Oct. 3, 2007, making Santos the oldest case on its docket this term. This was the Hoosier attorney's first appearance before the SCOTUS and now represents a victory in a case that he took pro bono.

"My client is very pleased that he's properly being kept a free men," said Vare, indicating he spoke with his client within minutes of hearing about the ruling this morning. "Legally, I'm very pleased because it reflects the arguments we made about this ambiguous statute and, what's most interesting, is the division of justices on either side shows how difficult it was interpreting this statute and applying interpretations to the facts here."
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  1. A traditional parade of attorneys? Really Evansville? Y'all need to get out more. When is the traditional parade of notaries? Nurses? Sanitation workers? Pole dancers? I gotta wonder, do throngs of admiring citizens gather to laud these marching servants of the constitution? "Show us your billing records!!!" Hoping some video gets posted. Ours is not a narcissistic profession by any chance, is it? Nah .....

  2. My previous comment not an aside at court. I agree with smith. Good call. Just thought posting here a bit on the if it bleeds it leads side. Most attorneys need to think of last lines of story above.

  3. Hello everyone I'm Gina and I'm here for the exact same thing you are. I have the wonderful joy of waking up every morning to my heart being pulled out and sheer terror of what DCS is going to Throw at me and my family today.Let me start from the !bebeginning.My daughter lost all rights to her 3beautiful children due to Severe mental issues she no longer lives in our state and has cut all ties.DCS led her to belive that once she done signed over her right the babies would be with their family. We have faught screamed begged and anything else we could possibly due I hired a lawyer five grand down the drain.You know all I want is my babies home.I've done everything they have even asked me to do.Now their saying I can't see my grandchildren cause I'M on a prescription for paipain.I have a very rare blood disease it causes cellulitis a form of blood poisoning to stay dormant in my tissues and nervous system it also causes a ,blood clotting disorder.even with the two blood thinners I'm on I still Continue to develop them them also.DCS knows about my illness and still they refuse to let me see my grandchildren. I Love and miss them so much Please can anyone help Us my grandchildren and I they should be worrying about what toy there going to play with but instead there worrying about if there ever coming home again.THANK YOU DCS FOR ALL YOU'VE DONE. ( And if anyone at all has any ideals or knows who can help. Please contact (765)960~5096.only serious callers

  4. He must be a Rethuglican, for if from the other side of the aisle such acts would be merely personal and thus not something that attaches to his professional life. AND ... gotta love this ... oh, and on top of talking dirty on the phone, he also, as an aside, guess we should mention, might be important, not sure, but .... "In addition to these allegations, Keaton was accused of failing to file an appeal after he collected advance payment from a client seeking to challenge a ruling that the client repay benefits because of unreported income." rimshot

  5. I am not a fan of some of the 8.4 discipline we have seen for private conduct-- but this was so egregious and abusive and had so many points of bad conduct relates to the law and the lawyer's status as a lawyer that it is clearly a proper and just disbarment. A truly despicable account of bad acts showing unfit character to practice law. I applaud the outcome.

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