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. Thank you, John Smith, for pointing out a needed correction. The article has been revised.

  2. The "National institute for Justice" is an agency for the Dept of Justice. That is not the law firm you are talking about in this article. The "institute for justice" is a public interest law firm. http://ij.org/ thanks for interesting article however

  3. I would like to try to find a lawyer as soon possible I've had my money stolen off of my bank card driver pressed charges and I try to get the information they need it and a Social Security board is just give me a hold up a run around for no reason and now it think it might be too late cuz its been over a year I believe and I can't get the right information they need because they keep giving me the runaroundwhat should I do about that

  4. It is wonderful that Indiana DOC is making some truly admirable and positive changes. People with serious mental illness, intellectual disability or developmental disability will benefit from these changes. It will be much better if people can get some help and resources that promote their health and growth than if they suffer alone. If people experience positive growth or healing of their health issues, they may be less likely to do the things that caused them to come to prison in the first place. This will be of benefit for everyone. I am also so happy that Indiana DOC added correctional personnel and mental health staffing. These are tough issues to work with. There should be adequate staffing in prisons so correctional officers and other staff are able to do the kind of work they really want to do-helping people grow and change-rather than just trying to manage chaos. Correctional officers and other staff deserve this. It would be great to see increased mental health services and services for people with intellectual or developmental disabilities in the community so that fewer people will have to receive help and support in prisons. Community services would like be less expensive, inherently less demeaning and just a whole lot better for everyone.

  5. Can I get this form on line,if not where can I obtain one. I am eligible.

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