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U.S. v. Santos Elevates Section 1956(a)(1) "Proceeds" to a True Term of Art

December 8, 2008

I have three great loves today: Statutory construction, Justice Scalia, and the third is irrelevant to this post. Making my day is a newly discovered decision rendered as the highlight of the story of some gentlemen involved in a gambling ring–U.S. v. Santos, 553 U.S. ___ (2008). There is nothing that differentiates this gambling ring from any others–it simply consisted of a bookie and his underlings, who accepted bets for bookie, dispersed winnings, and handled collections. At the end of the day, the gentlemen took their vigorish (vig) from the net proceeds. Simple as that.

Eventually the gentlemen, reaching their break-even point, were prosecuted for, inter alia, money laundering under the authority of 18 U.S.C. 1956(a)(1)(A)(i), which provides:

  • “Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction[,] which in fact involves the proceeds of specified unlawful activity[,] . . . (A)(i) with the intent to promote the carrying on of specified unlawful activity[,] . . . [shall be sentenced accordingly]. (Emphasis added.)” (Please note that is a quote–I did not write that.)

The question on review, therefore, is obvious and unending: What are “proceeds”? Here, are they profits or receipts? Receipts will arguably be a higher number in many money laundering activities, as they were in the instant case. (Compare United States v. Farese, 248 F. 3d 1056 (11th Cir. 2001) (Interpreting section 1965(a)(3)(B) the Court of Appeals noted that the trial court sentenced defendants based upon their vig from a money laundering scheme consisting of exchanging small bills for large bills, which vig was under the relevant $100,000 threshold, whereas the total bills exchanged approximated nearly 1M ).

If I just lost you and you’re wondering why the foregoing distinction caught the twilight of Justice Scalia’s eye (and made me write such kindly things about him), you have to understand the sentencing laws. Congress, in its lofty wisdom, enacted the United States Sentencing Guidelines (USSG) to make it easy for judges to sentence defendants without using discretion or being swayed by sentiment, as may be prone to happen down in the trenches (as opposed to on the Hill). The USSG is a lot like the Weight Watchers Points Program, i.e. turkey is not worth as many points as beef, unless you eat the whole turkey. Then you’re toast.

Similarly, money laundering has its own points system and based upon the amount of money, or, “proceeds,” one is convicted of laundering, a chart produces a corresponding sentencing range, from which the judge must impose following conviction. (The following site address will take you to a USSG “points” sentencing chart: .)

This is where things get interesting; however, you’ll have to stay tuned because there’s a time to study and a time to . . . blog.

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