Posted on June 7, 2008 at 6:19 am by Eliza Presson
Below, Amy discusses one of the decisions released on Monday.
At issue in No. 06-1005, United States v. Santos, was whether the term â€œproceeds,â€ as used in the federal money-laundering statute, means â€œreceiptsâ€ (as the United States contended) or â€œprofitsâ€ (as the respondents argued). Until Monday, courtwatchers were less interested in what the Court was going to do in Santos than they were in when it was going to do something: as Marty noted shortly after the opinion was released, Santos was the oldest case still remaining from the October sitting, and certainly few people would have anticipated that we would have had to wait longer for Santos than for more high-profile cases (such as Medellin) from the same sitting. And although Mondayâ€™s decision answered the â€œwhenâ€ question, it left open others, such as (again, as Marty observes) what behind-the-scenes machinations caused the decision to take so long, and how exactly one should read the Courtâ€™s opinion.
The first signal that the opinion itself is going to be an unusual one comes at the outset: â€œJustice Scalia announced the judgment of the Court and delivered an opinion, in which Justice Souter and Justice Ginsburg join, and in which Justice Thomas joins as to all but Part IV.â€ (As Eugene Volokh noted on Monday, this line-up is not unprecedented but is â€œnoteworthy.â€) In the pluralityâ€™s view, the term â€œproceedsâ€ is inherently ambiguous: â€œthere is no more reason to think that â€˜proceedsâ€™ means â€˜receiptsâ€™ than there is to think that â€˜proceedsâ€™ means â€˜profits.â€™â€ In such a scenario, the plurality continues, the rule of lenity prevails, and it dictates a â€œprofitsâ€ definition of proceeds.
The plurality rejects the governmentâ€™s arguments that a â€œprofitsâ€ definition will â€œfail to give the federal money-laundering statute its proper scope.â€ It notes (among other things) that any â€œspeculat[ion] about congressional purpose . . . would also have to confront . . . [what] respondents have described as a â€˜merger problemâ€™â€ â€“ that is, the likelihood that â€œany specified unlawful activity, an episode of which includes transactions which are not elements of the offense and in which a participant passes receipts on to someone else, would merge with money laundering.â€ The plurality found no reason why Congress might have wanted to â€œradically increaseâ€ a defendantâ€™s sentence based on a transaction for which it had already provided a punishment elsewhere.
The plurality is also unmoved, to say the least, by the governmentâ€™s suggestion that a â€œprofitsâ€ interpretation will â€œhinder effective enforcement of the law.â€ Characterizing that argument as favoring a â€œâ€˜receiptsâ€™ interpretation becauseâ€”quite franklyâ€”it is easier to prosecute,â€ Justice Scalia explains first that even to the extent that a â€œprofitsâ€ interpretation requires additional work by the government, Congress â€œhas imposed similar proof burdensâ€ in other criminal statutes. In any event, he emphasizes, â€œthe Government exaggerates the difficulties,â€ as prosecutors need only to show â€œthat a single instance of specified unlawful activity was profitable and gave rise to the money involved in a charged transaction.â€ And the government can satisfy the knowledge element of the money-laundering statute, Scalia explains, through circumstantial evidence such as a long-running relationship between the launderer and the criminal.
Finally, the plurality rejects Justice Stevensâ€™s interpretation, outlined in his concurring opinion (more on this below), of the term â€œproceedsâ€ as meaning â€œprofitsâ€ in some circumstances but â€œreceiptsâ€ in others. Observing that such an interpretation was not advanced by either the federal government nor any amicus and, moreover, that â€œit has no precedent in our cases,â€ the plurality emphasizes that the Courtâ€™s â€œobligation to maintain the consistent meaning of words in statutory text does not disappear when the rule of lenity is involved.â€ And while the plurality acknowledges that â€œthe Courtâ€™s holding is limitedâ€ by Justice Stevensâ€™s narrower opinion, it explains that â€œthe narrowness of his ground consists of finding that â€˜proceedsâ€™ means â€˜profitsâ€™ when there is no legislative history to the contrary. That is all that our judgment holds.â€
Concurring in the judgment, Justice Stevens provided a fifth vote to affirm the judgment below. But although he agreed with the plurality that, â€œ[f]aced with both a lack of legislative history speaking to the definition of â€˜proceedsâ€™ when operating a gambling business is the â€˜specified unlawful activityâ€™ and . . . that Congress could not have intended the perverse result that would obtain in this case under Justice Alitoâ€™s opinion, the rule of lenity may weigh in the determination,â€ he would construe the term â€œproceedsâ€ to mean â€œreceiptsâ€ â€“ rather than â€œprofitsâ€ â€“ when the legislative history reflects Congressâ€™s intent to do so.
Justice Breyer joined Justice Alitoâ€™s dissent but also filed a separate opinion in which he expressed his â€œdoubt that Congress intended the money laundering statute automatically to cover financial transactions that constitute an essential part of a different underlying crime.â€ But he parted ways with the plurality on how to solve the â€œmerger problem.â€ Rather than â€œlook[ing] to the word â€˜proceedsâ€™ for a solution,â€ he suggested in particular that the problem could be solved by the U.S. Sentencing Commission, â€œwithout resort to creating complex interpretations of the statuteâ€™s language.â€
In his dissent, Justice Alito began â€“ like the plurality â€“ with an analysis of the text of Section 1956(a). In his view, the â€œprimary definitionâ€ of the term â€œproceedsâ€ is â€œthe total amount brought in.â€ However, even to the extent that the term â€œproceedsâ€ has â€œmore than one meaning,â€ Justice Alito would not â€œabandon any effort at interpretation and summon in the rule of lenity,â€ but would instead â€œask what the term â€˜proceedsâ€™ customarily means in the context that is relevant hereâ€”a money laundering statute.â€ Other money laundering statutes, Alito points out, define the term in terms of â€œthe total amount brought in,â€ as do an international treaty and fourteen states. They do so, Justice Alito continues, because such a definition serves the two purposes of money-laundering statutes: deterring criminal activity and preventing the growth of criminal enterprises. By contrast, the pluralityâ€™s narrower construction of â€œproceedsâ€ would both exclude conduct that was not profitable even when the enterprises responsible for the conduct were generally successful and would â€œintroduce pointless and difficult problems of proof.â€ Thus, the dissent concludes, â€œthe term â€˜proceedsâ€™ . . . means gross receipts, not net income.â€ Moreover, he continues, â€œcontrary to the approach taken by Justice Stevens, I do not see how the meaning of the term . . . can varying depending on the nature of the illegal activity that produced the laundered funds.â€ Finally, Justice Alito dismissed the other justicesâ€™ concerns about the â€œmergerâ€ problem as â€œmisplaced.â€ Like Justice Breyer, Justice Alito regards â€œthe so-called merger problemâ€ as â€œfundamentally a sentencing problemâ€ that, in any event, â€œoccurs in only a subset of money laundering cases.â€
So what exactly does all this mean? If youâ€™re Efrain Santos and Benedicto Diaz, itâ€™s all good: the opinion is a get-out-of-jail-sooner pass. The implications for everyone else â€“ or, at least, everyone else who is not charged with operating similar gambling operations â€“ are, as Marty discussed on Monday, far less clear.