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June 06, 2008
Confusion in United States v. Santos
The Supreme Court this past Monday handed down its decision in United States v. Santos, a case that turns on whether the phrase “proceeds of some form of unlawful activity” in the federal money-laundering statute, 18 U.S.C. §1956(a)(1), means “profits” (net income) from the unlawful activity or simply any “receipts” (payments) from the unlawful activity. (The unlawful activity at issue in the case was illegal gambling). In a closely divided ruling, the Court opted for the “profits” construction. But discerning the precedential effect of the Court’s ruling is a little like trying to make sense of Alice in Wonderland. The Justice’s opinions in the case are of the by-now-familiar fractured variety: Justice Scalia authored the plurality opinion, joined by Justices Souter, Ginsburg, and Thomas — except for Part IV, in which Justice Thomas did not join; Justice Stevens concurred in the outcome reached by the plurality, but not in its reasoning; Justice Alito authored a dissenting opinion joined by Chief Justice Roberts, Justice Kennedy, and Justice Breyer; and Justice Breyer issued a separate dissent joined by no one else.
Significantly, Part IV of the plurality opinion, which Justice Thomas refused to join, focuses entirely on the plurality’s differences with Justice Stevens and ends by seeking to characterize “the stare decisis effect of Justice Stevens’ opinion” — given that his vote is necessary to the outcome of the case. Justice Stevens’ opinion parts company with the plurality because Stevens refuses to construe the word “proceeds” in the federal money laundering statute always to mean “profits” from the underlying predicate crime. Rather, he argues that “proceeds” can mean either “profits” or “receipts,” depending on the unlawful activity at issue. Characteristically for Justice Stevens, the determinative factor is Congress’ intent regarding the particular unlawful activity at issue. In the case of illegal gambling, however, Justice Stevens is unable to discover any specific legislative intent about whether “proceeds” was meant to cover merely “profits” or also “receipts.” So, faced with (1) “a lack of legislative history speaking to the definition of ‘proceeds’ when operating a gambling business is the ‘specified unlawful activity’” and (2) his “conviction” that “Congress could not have intended” the four-fold sentence enhancement (from 5 to 20 years) that would result from treating the use of gambling receipts to pay the expenses of operating an illegal gambling business as a separate offense (money laundering) from the operation of the gambling business itself (underlying offense), Justice Stevens agrees with the plurality that the Rule of Lenity should tip the scales in favor of interpreting “proceeds” to mean “profits” in this case. Got that?
Given that Justice Stevens’ vote was necessary to the outcome in the case, his in-between opinion leaves considerable doubt as to the precise holding of the case. Justice Scalia, joined by Justices Souter and Ginsburg, argues that Justice Stevens’ construction narrows the Court’s holding down to: “Proceeds” means “profits” when there is no legislative history to the contrary. But only three Justices accept this characterization of the case’s precedential holding! Justice Thomas pointedly, though silently, refuses to join it. Justice Stevens, in a footnote, disavows this characterization, emphasizing his belief that Congress could not have intended the perverse result (four-fold enhancement) that would follow if “proceeds” were read to include “receipts” from the operation of an unlicensed gambling business. Justice Alito’s dissent, joined by Justices Kennedy, Breyer, and Chief Justice Roberts, likewise takes issue with the plurality’s characterization — arguing that five Justices (presumably counting Justice Stevens) actually agree that the term “proceeds” includes gross revenues from the sale of contraband and the operation of organized crime syndicates involving such sales.
So which is it? Does “proceeds” mean “profits” when there is no legislative history to the contrary – and possibly (to be decided another day) even if there is? Or does “proceeds” mean “profits” only when a perverse sentencing disparity exists between the underlying offense and the money laundering penalty? Or is the upshot of the ruling that “proceeds” always includes gross revenues from the sale of contraband? I frankly have no idea, though I suspect that the only reliable characterization of the Court’s holding is that when the underlying predicate offense is illegal gambling, “proceeds,” for money-laundering purposes, means “profits.” That, unfortunately, does not give much guidance to lower courts, defense counsel, or prosecutors seeking to determine whether 18 U.S.C. §1956 is triggered in the context of other predicate offenses. Which conundrum almost leaves me wondering whether we shouldn’t require the Court, in cases where it issues fractured plurality opinions, to provide a separate statement joined by at least five Justices setting forth the case’s holding for future reference?
Posted by Anita S. Krishnakumar at June 6, 2008 09:36 AM
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Comments
Well, in this case, of course -- as I noted on Monday -- http://www.scotusblog.com/wp/the-santos-resolution/ -- the Justices not only lacked a majority rationale, but also lacked a majority on the very question of what the precedential effect would be. And where that's the case, what would they include in the "separate statement"?
I'm more interested, though, in a broader question your post raises: Who is the "we" in the final sentence? I assume you mean "Congress," enacting such a requirement by statute. Would such a statute be constitutional? The standard answer is "no," but there's very little consensus about exactly why that's the case.
Posted by: Marty Lederman at June 6, 2008 11:19 AM
Congrats - a positive link to this posting by Robert VerBruggen on Bench Memos over at National Review Online.
I hope this doesn't hurt your standing in the academy
Posted by: Maryland Conservatarian at June 6, 2008 05:51 PM
Perhaps Santos indicates a failure of textualism. Why did this case become a battle over the word "proceeds", and to a lesser extent, "promote"? Why instead couldn't it have been a dispute over when a crime is complete (as
Breyer indicates it should be) or the meaning of money laundering in the context of the various predicate crimes (which Stevens indicates it should be)? Perhaps there are good reasons why not -- disposing of the proceeds is traditionally part of at least some crimes, criminal defendants should have fair warning of prohibited conduct -- and perhaps Congress should have written a better statute. But it seems that "money laundering" has some inherent meaning which Congress was trying to catch, perhaps in some forest-and-trees way it is a mistake to determine what statutes mean solely by the meaning of their constituent words.
Posted by: r.friedman at June 9, 2008 08:47 AM
