It would appear that a dangerous debate is beginning in American legal circles, as the United States Supreme Court is debating what is meant by the term “proceeds of crime” in American anti-money laundering legislation. The author of the opinion article below believes that the word “gross” should be inserted before all references to “proceeds of crime”.
The concept of “proceeds of crime” should be straightforward – cash or other negotiable instruments generated by a predicate offense, regardless of whether the offender has generated an economic profit or not. If the United States Supreme Court expects money launderers to keep a running profit and loss statement in their BlackBerrys, they will be sorely disappointed.
Time to fix legal loophole
The Monterey County Herald
Article Last Updated: 09/24/2008 01:38:47 AM PDT
It's time to quash the notion that "those liberal judges" are responsible for all the fuzzy-headed legal rulings that allow criminals to go free. It seems that the court's conservative wing wants in on the hair-splitting action, as demonstrated by one ruling that could wipe out a significant Central Coast drug prosecution
In a case out of Indiana, United States v. Santos, the mostly conservative U.S. Supreme Court ruled recently that when prosecutors use money-laundering statutes to go after drug dealers and other shady characters, they must show that the money being laundered constitutes profits from a criminal enterprise and not simply cash flow.
In other words, if federal agents were to find a sack of cash in the back room of a drug den, they could prosecute the owner of said cash for money laundering only if they could demonstrate that the cash was surplus, that it wasn't being used to cover expenses. Even if the expenses were for such things as the purchase of drugs or payment of smugglers.
It would not much of a stretch to argue that unless the drug kingpin happened to leave a profit-and-loss statement with the sack of cash, and unless the profit-and-loss statement documented the near certainty that the drug operation was a money-maker, federal prosecutors could forget about using one of the more useful weapons in the war on drugs.
The majority opinion was written by conservative Justice Antonin Scalia, who was joined by conservative Clarence Thomas and liberals David Souter and Ruth Bader Ginsburg. They did a marvelous job of making something out of nothing. The rationale was that when Congress wrote the money laundering statute, it referred to the "proceeds" of money laundering without specifying whether it meant proceeds as in profits or proceeds as in revenues or receipts. Scalia wrote that he had no quarrel with Congress' intent, only with its ambiguity.
It would seem to be a fairly simple matter for Congress to fix the problem, but it has been four months since the ruling and that hasn't happened.
U.S. v. Santos comes into play locally with the long-running case of U.S. v. Javier Vasquez-Robles et al, which has been slogging its way through federal court in San Jose for a full six years. Those with long memories may remember that Vasquez-Robles, proprietor of La Esperanza markets in Salinas, Watsonville, Santa Cruz and San Jose, was busted in 2002 along with some of his relatives for allegedly selling sizable quantities of cocaine and laundering sizable quantities of cash.
How slowly has the case been moving? Well, consider that Barack Obama was re-elected as a senator—a state senator— the year Vasquez-Robles was indicted and John McCain was barely past retirement age. In other words, it has been quite a while. A defense motion to toss out the money laundering counts against the Vasquez-Robles group because of the U.S. v. Santos threatens to make a mockery out of the notion of speedy trial, just as U.S. v. Santos makes a mockery of a good law.
Congress should fix it at its earliest convenience. Simply inserting "gross" before "proceeds" would do the trick.
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