Skip to: Content
Skip to: Site Navigation
Skip to: Search


Harder task to nail money launderers

Two high court rulings on Monday will complicate US efforts to prove certain crimes.

(Page 2 of 2)



But with the plurality justices siding with the defendants in the case, federal prosecutors will now have to prove in illegal gambling cases that alleged criminal dollars were, in fact, profits (total receipts minus operating expenses) from an illegal enterprise rather than simply money received as part of an illegal operation.

Skip to next paragraph

The issue arose in the case of Efrain Santos and Benedicto Diaz. From the 1970s through the 1990s, Mr. Santos ran an illegal lottery, or "bolita," in northwest Indiana.

Under the Santos operation, gamblers placed bets with runners who took a commission from the bet money and gave the betting slips and remaining money to collectors. The collectors then took their cut from the funds and delivered the rest of the money to Santos. He then paid the winners from the remaining funds. Mr. Diaz worked as a collector.

Federal agents shut down the gambling ring, and Santos was convicted of gambling and money-laundering offenses. Diaz pled guilty to money-laundering conspiracy.

Santos was sentenced to five years in prison on the gambling charges and 17 years and 6 months for money laundering. Diaz was sentenced to nine years in prison for conspiring to launder money.

On appeal, lawyers for Santos argued that the government's expansive definition of "proceeds" allowed prosecutors to seek more than three times the level of punishment for essentially the same offense. The prosecutors did it by basing Santos's money-laundering sentence on the total receipts of his gambling operation.

The lawyers argued that the prosecutors should have based the money-laundering sentence on the profits of the gambling operation, not the total amount of money that changed hands in the illegal lottery.

The Seventh Circuit Court of Appeals in Chicago agreed with Santos. It ruled that running an illegal gambling operation was not also automatically an illegal money-laundering operation.

In appealing to the US Supreme Court, Justice Department lawyers said that the gross receipts of a crime reflect the magnitude of the criminal activity. All gross receipts can be used to promote further crime, government lawyers said.

In its decision on Monday, the high court refused to embrace that broad approach. "If 'proceeds' meant 'receipts,' nearly every violation of the illegal-lottery statute would also be a violation of the money-laundering statute," Scalia wrote.

"Prosecutors, of course, would acquire the discretion to charge the lesser lottery offense, the greater money-laundering offense, or both – which would predictably be used to induce a plea bargain to the lesser charge," Scalia said.

Viewing "proceeds" as "receipts" could convert a broad range of payments into money-laundering crimes, he said. "Few crimes are entirely free of cost, and costs are not always paid in advance," Scalia wrote.

In a dissent, Justice Samuel Alito, a former US Attorney in New Jersey, said a fair reading of the statute would view the word "proceeds" as the "total amount brought in."

"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 organized criminal enterprises," Justice Alito wrote.

Scalia's plurality decision was joined by Justices Thomas, David Souter, and Ruth Bader Ginsburg.

Alito's dissent was joined by Chief Justice John Roberts and Justices Anthony Kennedy and Stephen Breyer.

Permissions