Supreme Court to take up Gambling and Money Laundering Case – The Government Should Lose This One

The Supreme Court has decided to hear a case involving the money laundering of gambling proceeds. What it boils down to is that the government doesn’t want to have to prove its case to the establish standard and has thrown up the red herring of accounting issues.

The governments view in US vs Santos, is that gambling and money laundering are two separate crimes. The 7th Circuit ruled in favor of the defendants and wisely considered the money laundering, “integral or constituent elements of the underlying gambling offense” and not a separate offense.

The governments petition claims that unless there is a reversal of the decision it, “poses serious obstacles to effective enforcement of the money laundering statute. It removes a large class of routinely-prosecuted cases from the statute's reach.”

So the government will have less control over the voluntary transactions of its citizens - what’s the downside?

The 7th Ciruits judgement in favor of Santos on relied heavily on the precedent in United States v. Scialabba. Specifically, Scialabba held “that the word ‘proceeds’ … denotes net rather than gross income of an unlawful venture,” id. at 478, “otherwise the predicate crime merges into money laundering (for no business can be carried on without expenses) and the word ‘proceeds’ loses operational significance.”

That makes sense.

The government appeal doesn’t. It argues that since it’s hard to tell proceeds from profit, especially in a criminal enterprise, they shouldn’t have to do it. The 7th Circuits response to that argument was to suggest they bring that “solid policy point” up with Congress.

Lets hope the government loses this one.

Links:

Article on Supreme Court taking the case

Rulings and Case Information