Monday, June 2, 2008

Supreme Court Rules Against the Government in Two Money Laundering Cases

One would not normally think of money laundering in the same sentence as white collar crime, since one usually considers the money laundering statutes in the context of drugs or gambling.  But the reality is that "[t]here are more than 250 predicate offenses for the money-laundering statute," (J. Scalia, Santos) and often one sees money laundering added in white collar cases. (see here)  It is a crime facing Attorney Ben Kuehne of Miami (see here). Thus, the Supreme Court decisions against the government in money laundering cases are important to the white collar area.

In Cuellar v. United States, the Court reversed a Fifth Circuit decision.  The Court held -

"The provision of the money laundering statute under which petitioner was convicted requires proof that the transportation was "designed in whole or in part to conceal or disguise the nature, the location, the source, the ownership, or the control" of the funds. §1956(a)(2)(B)(i). Although this element does not require proof that the defendant attempted to create the appearance of legitimate wealth, neither can it be satisfied solely by evidence that a defendant concealed the funds during their transport. In this case, the only evidence introduced to prove this element showed that petitioner engaged in extensive efforts to conceal the funds en route to Mexico, and thus his conviction cannot stand."

In United States v. Santos, the Court affirmed a Seventh Circuit decision.  The Court held -

"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 defendant. The rule of lenity requires ambiguous criminal laws to be interpreted in favor of the defendants subjected to them. See United States v. Gradwell, 243 U. S. 476, 485 (1917); McBoyle v. United States, 283 U. S. 25, 27 (1931); United States v. Bass, 404 U. S. 336, 347– 349 (1971). This venerable rule not only vindicates the fundamental principle that no citizen should be held accountable for a violation of a statute whose commands are uncertain, or subjected to punishment that is not clearly prescribed. It also places the weight of inertia upon the party that can best induce Congress to speak more clearly and keeps courts from making criminal law in Congress’s stead. Because the "profits" definition of"proceeds" is always more defendant-friendly than the"receipts" definition, the rule of lenity dictates that it should be adopted."


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Very interesting case. I agree with the plurality's observation that equating proceeds with gross receipts effectively adds a money laundering charge (and a substantial increase in punishment) to a variety of crimes. I also think Alito is correct that using the "profits" definition creates a headache for the Government, particularly in cases where predicate offenses constitute an ongoing course of conduct, such as a scheme to defraud.

What do you think the impact is of this decision on cases where the predicate offense is mail / wirre fraud?

Posted by: Gene_SF | Aug 19, 2008 6:54:37 PM

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