Los Angeles Criminal Law Blog

The Rule of Lenity, The Crime of Money Laundering

Posted on: June 15, 2008 at 9:50 p.m.

On the assumption that all readers will have by now be informed of the ridiculous (beastial pictures on judicial websites) and the sublime (yesterday's Supreme Court decision affirming the availability of habeas corpus for Guantanamo prisoners), let me deal with something in between: two defense victories in the Supreme Court on June 2nd in cases interpreting the federal money laundering statutes.

The unanimous opinion written for the Court by Judge Thomas in United States v. Cuellar is of more limited utility, in that it deals with a specific section of 18 U.S.C. section 1956 prohibiting the transportation of illegal proceeds to conceal them. Nonetheless, what is refreshing is that the Court does what so few lower courts do: it reads the statute narrowly, as criminals statutes should be read, rather than giving them the broad interpretation always desired by the prosecution. In Cuellar, money was being sent back to Mexico concealed in a car to pay members in a drug smuggling operation. The fact that the concealed money was clearly proceeds of a drug operation did not stop the Court from holding that the smuggling was not a money laundering operation, because, while the money was concealed in order to transport it, it was not being transported in order to conceal it, the required element in the relevant provision of section 1956. The Court ruled that the purpose of the money laundering statutes was to criminalize attempts to give criminal proceeds the appearance of "legitimate wealth." Remarkably, the decision did not merely reverse due to a faulty jury instruction, but actually held Cuellar not guilty as a matter of law.

In the second case, United States v. Santos, Justice Scalia demonstrated that while when he is bad, he is very bad (the Guantanamo cases), when he is good, he is very, very good. He threw future money laundering prosecutions into chaos by holding that the statute applies only to a criminal operation's profits, rather than simply gross receipts or operating expenses. When Justice Scalia believes in something, damn the consequences, and he does believe in fair notice to the citizen of what is criminal and he does believe in the rule of lenity. Writing for a four judge plurality (himself, Thomas, Ginsberg, Souter), joined by Justice Stevens' concurrence, Scalia observed that the term "proceeds" in the money laundering statute could mean either receipts or profits; given that ambiguity, "under a long line of our decisions, the tie must go to the defendant. The rule of lenity requires ambiguous criminal statutes to be interpreted in favor of the defendants subjected to them." Music to our ears, and language applicable to state statutes as well.

Tagged as: theft, white collar crime fraud theft laws

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