Posted on June 3, 2008 by Thomas Withers

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.

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Posted on March 26, 2008 by Anthony Lake

Medellin v. Texas: The Effect on International Law on Domestic Criminal Law and Procedure

            Defense counsel with foreign clients will not be pleased with the latest offering from the United States Supreme Court and its take on international law. José Ernesto Medellín, a Mexican national, was convicted and sentenced in a Texas state court for the capital murder of two girls. Fortunately, Mexico brought an action in the International Court of Justice (ICJ) in the Hague against the United States on behalf of Medellin’s and 51 other Mexican nationals in Case Concerning Avena and Other Mexican Nationals (Mex. v. U. S.), 2004 I. C. J. 12 (Judgment of Mar. 31) (Avena). The ICJ held that, based on violations of the Vienna Convention, the nationals were entitled to review and reconsideration of their convictions and sentences in state courts in the United States, regardless of whether the defendants had waived their rights to raise challenges under the Vienna Convention on Consular Relations (Vienna Convention or Convention) for failure to comply with generally-applicable state rules governing challenges to criminal convictions. President George W. Bush even showed his support for the international tribunal by issuing a Memorandum to the Attorney General in which he directed that the United States discharge its international obligations by having State courts give effect to Avena. Medellin did not raise any Vienna Convention claims prior to his conviction. After the state court dismissed Medellin’s petition for writ of habeas corpus to raise his Vienna Convention claims, the United States Supreme Court granted certiorari in the case of Medellin v. Texas.

            Chief Justice John Roberts, writing for the majority, recognized that the Vienna Convention, which had been ratified by the United States, guarantees that a person detained by a foreign country may require authorities of the detaining country to inform consular authorities of the detainee’s home country, and that the detainee may request assistance from the consul of his country. Furthermore, “Optional Protocol” of the Convention provides that disputes arising out of an interpretation or application of the Convention shall lie within the compulsory jurisdiction of the ICJ.

            The majority acknowledged that the ICJ’s decision in Avena constituted an international law obligation on the United States. However, it held that “not all international law obligations automatically constitute binding federal law enforceable in United States courts.” It noted that there was a distinction between treaties which automatically have effect as domestic law and those which do not and that treaties do not become domestic law “‘unless Congress has either enacted implementing statutes or the treaty itself conveys an intention that it be ‘self-executing’ and is ratified on these terms.’” (Citing Igartúa-De La Rosa v. United States, 417 F. 3d 145, 150 (1st Cir. 2005)). The majority concluded that “[b]ecause none of these treaty sources creates binding federal law in the absence of implementing legislation, and because it is uncontested that no such legislation exists… the Avena judgment is not automatically binding domestic law.”

            The Court held that the Convention’s Optional Protocal was a “bare grant of jurisdiction,” which said nothing about the effect of ICJ decisions and did not require signatories to comply with ICJ judgments. It noted that the Convention itself merely represented a “commitment” by member nations to comply with an ICJ decision, and that there was no indication that Congress, in ratifying the United Nations Charter, ever intended to vest ICJ decisions with immediate legal effect in U.S. courts. Also, the fact that the ICJ was required to enforce its judgments through the U.N. Security Council, on which the United States possesses a veto, indicated that its decisions were not immediately and directly binding in the U.S. Finally, the majority held that the President could not convert a non-self-executing treaty into a self-executing one by merely issuing a Memorandum. Justices Breyer, Souter and Ginsburg, naturally, dissented.
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