Supreme Court Curtails Money Laundering
I apologize for being away from the blogging world for the past 2 weeks, but the press of business has kept me too busy. There are many noteworthy developments in the blogosphere, but none more important to the criminal practitioner than the Supreme Court's decision yesterday on the landscape of money laundering.
The Supreme Court in United States v. Santos, -- S.Ct. --, 2008 WL 2229212, (available here) affirmed the Seventh Circuit in holding that the term “proceeds” in 18 U.S.C. § 1956 (a)(1) means “profits,” not “receipts.” Efrain Santos was found guilty of running an illegal lottery business in violation of 18 U.S.C. § 1955, and money laundering and conspiracy to commit money laundering in violation of 18 U.S.C. § 1956 (a)(1) and 18 U.S.C. § 1956 (h). He was sentenced to 60 months imprisonment for the illegal gambling charges and 210 months on the money laundering charges. Following affirmance on direct appeal, Santos filed a section 2255 motion to vacate his sentence, ultimately alleging in part, that that his payments to customers and collectors of his illegal operation did not constitute money laundering. United States v. Santos, 342 F.Supp.2d 781 (N.D. Ind. 2004). The district court granted Santos’ 2255 motion finding that Judge Easterbrook’s decision in United States v. Scialabba, 282 F.3d 475 (7th Cir. 2002), controlled, and that the “proceeds” of an illegal gambling business under 1956 means “net” proceeds, not the ongoing monies used to conduct the illegal business in the first place. That decision was affirmed on appeal. Santos v. United States, 461 F.3d 886 (7th Circuit 2006), and the government appealed to the Supreme Court.
Justice Scalia writing for the majority held that “proceeds” under section 1956 means “profits,” not the ongoing “receipts” of the illegal business. Justice Scalia adds “a word concerning the stare decisis effect of JUSTICE STEVENS’ [concurring] opinion.” 2008 WL 2229212, * 10. Because Justice Stevens’ vote was necessary to the Court’s judgment, but since it rested on a narrower ground, the Santos opinion is, accordingly, limited. Therefore, so that there will be no mistake as to the meaning of his opinion, Justice Scalia stakes out the exact contours – “that ‘proceeds’ means ‘profits’ when there is no legislative history to the contrary.” Id.
So, why is this opinion so important to us – because the government routinely uses money laundering to jack up a defendants’ sentence, if the defendant chooses to go to trial. Look at the effect on Santos – 60 months for gambling, but 210 months for money laundering. This decision effects many former and current cases. We should be looking through our inventory of cases to see what meritorious 2255 motions lie therein.
