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U.S. v. Santos: The Supreme Court Elevates 1956(a)(1)(A)(i) "Proceeds" to a Term of Art, PART TWO

December 10, 2008

It’s late, but I still have my fingers wrapped around two of my three loves du jour, so I’m here to blog.

I concluded my last post with an extremely simplified overview of why Justice Scalia’s timely elevation of section 1956(a)(1) “proceeds” to a true Term of Art has made me rather fancy him for the time being, i.e. it impacts sentences meted out under the United States Sentencing Guidelines (USSG) points system.

**Please note: The USSG is not officially referred to as the “points program”– Weight Watchers undoubtedly has intellectual property rights to the term and may not like their points program being associated with Congress’s less forgiving points program; however, for the satirical purposes of this blog, the USSG will be referred to as the “points program.” (One of the relevant exceptions under IP laws.) Ironically, many will attest that the USSG points program is, like Weight Watchers Points Program, also efficient at trimming burgeoning waistlines. In fact, the similarities between the two programs abound (e.g., both involve formal meetings, groups, group leaders, reporting requirements, and weigh-ins), hence the satirical cachet, but I digress.**

Returning to Justice Scalia’s well-written opinion in U.S. v. Santos . . . . Effrain Santos’s journey to the U.S. Supreme Court much resembled the journey taken by Paolo Coelho’s protagonist in the modern day parable of The Alchemist. In other words, he first exhausted his direct appeals, losing at every level, but then finally made his way back up to the U.S. Supreme Court via collateral attack (i.e., a “Petition for Writ of Habeas Corpus,” governed by 28 U.S.C. section 2255 (collateral appeal from a federal conviction)). (Section 28 U.S.C. section 2254 governs collateral appeals to the federal courts from state convictions.)

While Santos was in the first stage of his Habeas appeal–having filed the Petition with the U.S. District Court–the Seventh Circuit Court of Appeals decided U.S. v. Scialabba, 282 F. 3d 475 (7th Cir. 2002). In Scialabba, the court held that 1956(a)(1)’s reference to money laundering “proceeds” applied only to transactions involving money laundering profits, not receipts.

In a dramatic twist to Santos’s story, the tide of his losing streak turned. The District Court held there was not any evidence in the record establishing that the money forming the basis of the money laundering convictions constituted profits, not simply receipts, and vacated the money laundering convictions. 

In other words, with that ruling, Santos achieved his goal “money laundering weight” under the USSG points program. Subsequently, in Santos’s penultimate step to the U.S. Supreme Court, the Seventh Circuit Court of Appeals applied its rule in Scialabba to Santos, affirming the trial court’s ruling that vacated the money laundering convictions (based on the authority of Scialabba).

So what was Scialabba all about? And why should it make a difference whether “proceeds” mean receipts or profits?

The stage has been set, the lights are dimmed, and we are now ready to explore my new love for Justice Scalia and my enduring affection for Statutory Construction. Stay tuned for the analysis of the majority opinion in the next post of, “U.S. v. Santos: The Supreme Court Elevates 1956 ‘Proceeds’ to a Term of Art.”

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