United States v. Santos
Issues
Whether the undefined term “proceeds” as found in the federal money laundering statute, 18 U.S.C. § 1956(a)(1), means the gross receipts obtained from illegal activities or only the profits, i.e., the gross receipts less expenses.
Efrain Santos was convicted in Indiana federal court of running an illegal gambling business and money laundering. He presented a collateral attack against his conviction following the Seventh Circuit’s decision in another case, where it held that to prove money laundering, the government is required to show that profits from the underlying illegal activity were used to further promote or conceal that activity. Because Santos’s conviction was based on evidence that he used gross receipts, not profits, to promote his gambling ring, the District Court overturned his money laundering conviction. The Seventh Circuit upheld that decision, and the government appealed, contending that to secure a conviction it is only required to prove that gross receipts are used in a money laundering scheme. The government argues that statutory interpretation and practical enforcement considerations mandate a reading that “proceeds” means gross receipts, and Santos responds that in light of the fact that “proceeds” is not defined within the statute, the rule of lenity requires the Court to uphold the Seventh Circuit’s more restrictive reading of the term as profits. The outcome of this case will affect money laundering prosecutions tied to a wide variety of illegal activities and will affect the government’s burden in proving the elements of this charge.