United States v. Santos

(Slip Opinion) OCTOBER TERM, 2007 1

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convenience of the reader.

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

UNITED STATES v. SANTOS ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT

No. 06–1005. Argued October 3, 2007—Decided June 2, 2008

In an illegal lottery run by respondent Santos, runners took commis-

sions from the bets they gathered, and some of the rest of the money

was paid as salary to respondent Diaz and other collectors and to the

winning gamblers. Based on these payments to runners, collectors,

and winners, Santos was convicted of, inter alia, violating the federal

money-laundering statute, 18 U. S. C. §1956, which prohibits the use

of the “proceeds” of criminal activities for various purposes, including

engaging in, and conspiring to engage in, transactions intended to

promote the carrying on of unlawful activity, §1956(a)(1)(A)(i) and

§1956(h). Based on his receipt of salary, Diaz pleaded guilty to con-

spiracy to launder money. The Seventh Circuit affirmed the convic-

tions. On collateral review, the District Court ruled that, under in-

tervening Circuit precedent interpreting the word “proceeds” in the

federal money-laundering statute, §1956(a)(1)(A)(i) applies only to

transactions involving criminal profits, not criminal receipts. Find-

ing no evidence that the transactions on which respondents’ money-

laundering convictions were based involved lottery profits, the court

vacated those convictions. The Seventh Circuit affirmed.

Held: The judgment is affirmed.

461 F. 3d 886, affirmed.

JUSTICE SCALIA, joined by JUSTICE SOUTER, JUSTICE THOMAS, and

JUSTICE GINSBURG, concluded in Parts I–III and V that the term “pro-

ceeds” in §1956(a)(1) means “profits,” not “receipts.” Pp. 3–14, 16–17.

(a) The rule of lenity dictates adoption of the “profits” reading. The

statute nowhere defines “proceeds.” An undefined term is generally

given its ordinary meaning. Asgrow Seed Co. v. Winterboer, 513 U. S.

179, 187. However, dictionaries and the Federal Criminal Code

2 UNITED STATES v. SANTOS

Syllabus

sometimes define “proceeds” to mean “receipts” and sometimes “prof-

its.” Moreover, the many provisions in the federal money-laundering

statute that use the word “proceeds” make sense under either defini-

tion. The rule of lenity therefore requires the statute to be inter-

preted in favor of defendants, and the “profits” definition of “pro-

ceeds” is always more defendant-friendly than the “receipts”

definition. Pp. 3–6.

(b) The Government’s contention that the “profits” interpretation

fails to give the money-laundering statute its intended scope begs the

question; the Government’s contention that the “profits” interpreta-

tion hinders effective enforcement of the law is exaggerated. Neither

suffices to overcome the rule of lenity. Pp. 6–14.

(c) None of the transactions on which respondents’ money-

laundering convictions were based can fairly be characterized as in-

volving the lottery’s profits. Pp. 16–17.

JUSTICE SCALIA, joined by JUSTICE SOUTER and JUSTICE GINSBURG,

concluded in Part IV that JUSTICE STEVENS’ position that “proceeds”

should be interpreted to mean profits for some predicate crimes, “re-

ceipts” for others, is contrary to this Court’s precedents holding that

judges cannot give the same statutory text different meanings in dif-

ferent cases, see Clark v. Martinez, 543 U. S. 371. Pp. 14–16.

JUSTICE STEVENS concluded that revenue a gambling business uses

to pay essential operating expenses is not “proceeds” under 18

U. S. C. §1956. When, as here, Congress fails to define potentially

ambiguous statutory terms, it effectively delegates the task to federal

judges. See Commissioner v. Fink, 483 U. S. 89, 104. Because Con-

gress could have required that “proceeds” have one meaning when re-

ferring to some of the specified unlawful activities listed in

§1956(c)(7) and a different meaning when referring to others, judges

filling statutory gaps may also do so, as long as they are conscien-

tiously endeavoring to carry out Congress’ intent. Section 1956’s leg-

islative history makes clear that “proceeds” includes gross revenues

from the sale of contraband and the operation of organized crime

syndicates involving such sales, but sheds no light on how to identify

the proceeds of an unlicensed stand-alone gambling venture. Fur-

thermore, the consequences of applying a “gross receipts” definition of

“proceeds” to respondents are so perverse that Congress could not

have contemplated them: Allowing the Government to treat the mere

payment of an illegal gambling business’ operating expenses as a

separate offense is in practical effect tantamount to double jeopardy,

which is particularly unfair in this case because the penalties for

money laundering are substantially more severe than those for the

underlying offense of operating a gambling business. Accordingly,

the rule of lenity may weigh in the determination, and in that respect

Cite as: 553 U. S. ____ (2008) 3

Syllabus

the plurality’s opinion is persuasive. Pp. 1–6.

SCALIA, J., announced the judgment of the Court and delivered an

opinion, in which SOUTER and GINSBURG, JJ., joined, and in which THO-

MAS, J., joined as to all but Part IV. STEVENS, J., filed an opinion con-

curring in the judgment. BREYER, J., filed a dissenting opinion. ALITO,

J., filed a dissenting opinion, in which ROBERTS, C. J., and KENNEDY

and BREYER, JJ., joined.

Cite as: 553 U. S. ____ (2008) 1

Opinion of SCALIA, J.

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to

notify the Reporter of Decisions, Supreme Court of the United States, Wash-

ington, D. C. 20543, of any typographical or other formal errors, in order

that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

_________________

No. 06–1005

_________________

UNITED STATES, PETITIONER v. EFRAIN

SANTOS AND BENEDICTO DIAZ

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE SEVENTH CIRCUIT

[June 2, 2008]

JUSTICE SCALIA announced the judgment of the Court

and delivered an opinion, in which JUSTICE SOUTER and

JUSTICE GINSBURG join, and in which JUSTICE THOMAS

joins as to all but Part IV.

We consider whether the term “proceeds” in the federal

money-laundering statute, 18 U. S. C. §1956(a)(1), means

“receipts” or “profits.”

I

From the 1970’s until 1994, respondent Santos operated a

lottery in Indiana that was illegal under state law. See Ind.

Code §35–45–5–3 (West 2004). Santos employed a number

of helpers to run the lottery. At bars and restaurants,

Santos’s runners gathered bets from gamblers, kept a por-

tion of the bets (between 15% and 25%) as their commis-

sions, and delivered the rest to Santos’s collectors. Collec-

tors, one of whom was respondent Diaz, then delivered the

money to Santos, who used some of it to pay the salaries of

collectors (including Diaz) and to pay the winners.

These payments to runners, collectors, and winners

formed the basis of a 10-count indictment filed in the

United States District Court for the Northern District of

2 UNITED STATES v. SANTOS

Opinion of SCALIA, J.

Indiana, naming Santos, Diaz, and 11 others. A jury

found Santos guilty of one count of conspiracy to run an

illegal gambling business (§371), one count of running an

illegal gambling business (§1955), one count of conspiracy

to launder money (§1956(a)(1)(A)(i) and §1956(h)), and two

counts of money laundering (§1956(a)(1)(A)(i)). The court

sentenced Santos to 60 months of imprisonment on the

two gambling counts and to 210 months of imprisonment

on the three money-laundering counts. Diaz pleaded

guilty to conspiracy to launder money, and the District

Court sentenced him to 108 months of imprisonment. The

Court of Appeals affirmed the convictions and sentences.

United States v. Febus, 218 F. 3d 784 (CA7 2000). We

declined to review the case. 531 U. S. 1021 (2000).

Thereafter, respondents filed motions under 28 U. S. C.

§2255, collaterally attacking their convictions and sen-

tences. The District Court rejected all of their claims but

one, a challenge to their money-laundering convictions

based on the Seventh Circuit’s subsequent decision in

United States v. Scialabba, 282 F. 3d 475 (2002), which

held that the federal money-laundering statute’s prohibi-

tion of transactions involving criminal “proceeds” applies

only to transactions involving criminal profits, not crimi-

nal receipts. Id., at 478. Applying that holding to respon-

dents’ cases, the District Court found no evidence that the

transactions on which the money-laundering convictions

were based (Santos’s payments to runners, winners, and

collectors and Diaz’s receipt of payment for his collection

services) involved profits, as opposed to receipts, of the

illegal lottery, and accordingly vacated the money-

laundering convictions. The Court of Appeals affirmed,

rejecting the Government’s contention that Scialabba was

wrong and should be overruled. 461 F. 3d 886 (CA7 2006).

We granted certiorari. 550 U. S. ___ (2007).

Cite as: 553 U. S. ____ (2008) 3

Opinion of SCALIA, J.

II

The federal money-laundering statute prohibits a num-

ber of activities involving criminal “proceeds.” Most rele-

vant to this case is 18 U. S. C. §1956(a)(1)(A)(i), which

criminalizes transactions to promote criminal activity.1

This provision uses the term “proceeds” in describing two

elements of the offense: the Government must prove that a

charged transaction “in fact involve[d] the proceeds of

specified unlawful activity” (the proceeds element), and it

also must prove that a defendant knew “that the property

involved in” the charged transaction “represent[ed] the

proceeds of some form of unlawful activity” (the knowledge

element). §1956(a)(1).

The federal money-laundering statute does not define

“proceeds.” When a term is undefined, we give it its ordi-

nary meaning. Asgrow Seed Co. v. Winterboer, 513 U. S.

179, 187 (1995). “Proceeds” can mean either “receipts” or

“profits.” Both meanings are accepted, and have long been

accepted, in ordinary usage. See, e.g., 12 Oxford English

Dictionary 544 (2d ed. 1989); Random House Dictionary of

the English Language 1542 (2d ed. 1987); Webster’s New

International Dictionary 1972 (2d ed. 1957) (hereinafter

Webster’s 2d). The Government contends that dictionaries

generally prefer the “receipts” definition over the “profits”

——————

1 Section 1956(a)(1) reads as follows: “Whoever, knowing that the

property involved in a financial transaction represents the proceeds of

some form of unlawful activity, conducts or attempts to conduct such a

financial transaction which in fact involves the proceeds of specified

unlawful activity . . . (A)(i) with the intent to promote the carrying on of

specified unlawful activity . . . shall be sentenced to a fine of not more

than $500,000 or twice the value of the property involved in the trans-

action, whichever is greater, or imprisonment for not more than twenty

years, or both.”

Respondents were also convicted of conspiring to launder money

under §1956(h). Because the Government has not argued that respon-

dents’ conspiracy convictions could stand if “proceeds” meant “profits,”

see 461 F. 3d 866, 889 (CA7 2006), we do not address that possibility.

4 UNITED STATES v. SANTOS

Opinion of SCALIA, J.

definition, but any preference is too slight for us to con-

clude that “receipts” is the primary meaning of “proceeds.”

“Proceeds,” moreover, has not acquired a common mean-

ing in the provisions of the Federal Criminal Code. Most

leave the term undefined. See, e.g., 18 U. S. C. §1963; 21

U. S. C. §853. Recognizing the word’s inherent ambiguity,

Congress has defined “proceeds” in various criminal provi-

sions, but sometimes has defined it to mean “receipts” and

sometimes “profits.” Compare 18 U. S. C. §2339C(e)(3)

(2000 ed., Supp. V) (receipts), §981(a)(2)(A) (2000 ed.)

(same), with §981(a)(2)(B) (profits).

Since context gives meaning, we cannot say the money-

laundering statute is truly ambiguous until we consider

“proceeds” not in isolation but as it is used in the federal

money-laundering statute. See United Sav. Assn. of Tex.

v. Timbers of Inwood Forest Associates, Ltd., 484 U. S.

365, 371 (1988). The word appears repeatedly throughout

the statute, but all of those appearances leave the ambigu-

ity intact. Section 1956(a)(1) itself, for instance, makes

sense under either definition: one can engage in a finan-

cial transaction with either receipts or profits of a crime;

one can intend to promote the carrying on of a crime with

either its receipts or its profits; and one can try to conceal

the nature, location, etc., of either receipts or profits. The

same is true of all the other provisions of this legislation in

which the term “proceeds” is used. They make sense

under either definition. See, for example, §1956(a)(2)(B),

which speaks of “proceeds” represented by a “monetary

instrument or funds.”

JUSTICE ALITO’s dissent (the principal dissent) makes

much of the fact that 14 States that use and define the

word “proceeds” in their money-laundering statutes,2 the

——————

2 The majority of States with money-laundering laws, in fact, use “pro-

ceeds” without defining it. See Colo. Rev. Stat. Ann. §18–18–408 (2007);

Fla. Stat. §896.101 (2006); Ga. Code Ann. §§7–1–911, 7–1–915 (2004);

Cite as: 553 U. S. ____ (2008) 5

Opinion of SCALIA, J.

Model Money Laundering Act, and an international treaty

on the subject, all define the term to include gross receipts.

See post, at 3–5. We do not think this evidence shows that

the drafters of the federal money-laundering statute used

“proceeds” as a term of art for “receipts.” Most of the state

laws cited by the dissent, the Model Act, and the treaty

postdate the 1986 federal money-laundering statute by

several years, so Congress was not acting against the back-

drop of those definitions when it enacted the federal stat-

ute. If anything, they show that “proceeds” is ambiguous

and that others who believed that money-laundering stat-

utes ought to include gross receipts sought to clarify the

ambiguity that Congress created when it left the term

undefined.3

——————

Idaho Code §18–8201 (Lexis 2004); Ill. Comp. Stat., ch. 720, §29B–1

(West 2003); Kan. Stat. Ann. §65–4142 (2002); Minn. Stat. §§609.496 to

609.497 (2006); Miss. Code Ann. §97–23–101 (2006); Mo. Rev. Stat.

§574.105 (2000); Mont. Code Ann. §45–6–341 (2007); Nev. Rev. Stat.

§207.195 (2007); N. Y. Penal Law Ann. §§470.00 to 470.25 (West Supp.

2008); Okla. Stat., Tit. 63, §2–503.1 (2004); Ore. Rev. Stat. §164.170

(2007); 18 Pa. Cons. Stat. §5111 (Supp. 2008); R. I. Gen. Laws §11–9.1–

15 (2002); S. C. Code Ann. §44–53–475 (2002); Tenn. Code Ann. §§39–

14–901 to 39–14–909 (2006). Courts in these States have not construed

the term one way or the other. But cf. State v. Jackson, 124 S. W. 3d 139,

143 (Tenn. Crim. App. 2003) (linking “proceeds” with the defined term

“property”). California might belong in this list, for it has a money-

laundering provision in its Penal Code, in which it uses the term

“proceeds” but does not define it. See Cal. Penal Code Ann. §186.10

(West 1999). But California also has a more limited money-laundering

statute that uses and defines “proceeds.” See Cal. Health & Safety

Code Ann. §11370.9(h)(1) (West 2007). Maryland might belong on the

list as well: Its general money-laundering statute defines “proceeds”

simply to set a minimum value on the proceeds laundered, Md. Crim.

Law Code Ann. §5–623(a)(5) (Lexis 2002) (“money or any other property

with a value exceeding $10,000”), and its more limited money-

laundering statute does not define the term, see §11–304.

3 The principal dissent also suggests that Congress thought “proceeds”

meant “receipts” because the House of Representatives (but not the

Senate) had passed a money-laundering bill that did not use the word

6 UNITED STATES v. SANTOS

Opinion of SCALIA, J.

Under either of the word’s ordinary definitions, all

provisions of the federal money-laundering statute are

coherent; no provisions are redundant; and the statute is

not rendered utterly absurd. From the face of the statute,

there is no more reason to think that “proceeds” means

“receipts” than there is to think that “proceeds” means

“profits.” Under a long line of our decisions, the tie must

go to the defendant. The rule of lenity requires ambiguous

criminal laws to be interpreted in favor of the defendants

subjected to them. See United States v. Gradwell, 243

U. S. 476, 485 (1917); McBoyle v. United States, 283 U. S.

25, 27 (1931); United States v. Bass, 404 U. S. 336, 347–

349 (1971). This venerable rule not only vindicates the

fundamental principle that no citizen should be held

accountable for a violation of a statute whose commands

are uncertain, or subjected to punishment that is not

clearly prescribed. It also places the weight of inertia

upon the party that can best induce Congress to speak

more clearly and keeps courts from making criminal law

in Congress’s stead. Because the “profits” definition of

“proceeds” is always more defendant-friendly than the

“receipts” definition, the rule of lenity dictates that it

should be adopted.

III

Stopping short of calling the “profits” interpretation

absurd, the Government contends that the interpretation

should nonetheless be rejected because it fails to give the

——————

“proceeds” but rather used and defined a term (“criminally derived

property”) that, perhaps, included receipts. See post, at 5, n. 5. Putting

aside the question whether resort to legislative history is ever appropri-

ate when interpreting a criminal statute, compare United States v.

R. L. C., 503 U. S. 291, 306, n. 6 (1992), with id., at 307 (SCALIA, J.,

concurring in part and concurring in judgment), that bit of it is totally

unenlightening because we do not know why the earlier House terminol-

ogy was rejected—because “proceeds” captured the same meaning, or

because “proceeds” carried a narrower meaning?

Cite as: 553 U. S. ____ (2008) 7

Opinion of SCALIA, J.

federal money-laundering statute its proper scope and

because it hinders effective enforcement of the law. Nei-

ther contention overcomes the rule of lenity.

A

According to the Government, if we do not read “pro-

ceeds” to mean “receipts,” we will disserve the purpose of

the federal money-laundering statute, which is, the Gov-

ernment says, to penalize criminals who conceal or pro-

mote their illegal activities. On the Government’s view,

“[t]he gross receipts of a crime accurately reflect the scale

of the criminal activity, because the illegal activity gener-

ated all of the funds.” Brief for United States 21; see also

post, at 5–7 (ALITO, J., dissenting).

When interpreting a criminal statute, we do not play the

part of a mind reader. In our seminal rule-of-lenity

decision, Chief Justice Marshall rejected the impulse to

speculate regarding a dubious congressional intent.

“[P]robability is not a guide which a court, in construing a

penal statute, can safely take.” United States v. Wiltber-

ger, 5 Wheat. 76, 105 (1820). And Justice Frankfurter,

writing for the Court in another case, said the following:

“When Congress leaves to the Judiciary the task of imput-

ing to Congress an undeclared will, the ambiguity should

be resolved in favor of lenity.” Bell v. United States, 349

U. S. 81, 83 (1955).

The statutory purpose advanced by the Government to

construe “proceeds” is a textbook example of begging the

question. To be sure, if “proceeds” meant “receipts,” one

could say that the statute was aimed at the dangers of

concealment and promotion. But whether “proceeds”

means “receipts” is the very issue in the case. If “pro-

ceeds” means “profits,” one could say that the statute is

aimed at the distinctive danger that arises from leaving in

criminal hands the yield of a crime. A rational Congress

could surely have decided that the risk of leveraging one

8 UNITED STATES v. SANTOS

Opinion of SCALIA, J.

criminal activity into the next poses a greater threat

to society than the mere payment of crime-related ex-

penses and justifies the money-laundering statute’s harsh

penalties.

If we accepted the Government’s invitation to speculate

about congressional purpose, we would also have to con-

front and explain the strange consequence of the “receipts”

interpretation, which respondents have described as a

“merger problem.” See, e.g., Brief for Respondent Diaz 34.

If “proceeds” meant “receipts,” nearly every violation of the

illegal-lottery statute would also be a violation of the

money-laundering statute, because paying a winning

bettor is a transaction involving receipts that the defen-

dant intends to promote the carrying on of the lottery.

Since few lotteries, if any, will not pay their winners, the

statute criminalizing illegal lotteries, 18 U. S. C. §1955,

would “merge” with the money-laundering statute. Con-

gress evidently decided that lottery operators ordinarily

deserve up to 5 years of imprisonment, §1955(a), but as a

result of merger they would face an additional 20 years,

§1956(a)(1). Prosecutors, of course, would acquire the

discretion to charge the lesser lottery offense, the greater

money-laundering offense, or both—which would pre-

dictably be used to induce a plea bargain to the lesser

charge.

The merger problem is not limited to lottery operators.

For a host of predicate crimes, merger would depend on

the manner and timing of payment for the expenses asso-

ciated with the commission of the crime. Few crimes are

entirely free of cost, and costs are not always paid in

advance. Anyone who pays for the costs of a crime with its

proceeds—for example, the felon who uses the stolen

money to pay for the rented getaway car—would violate

the money-laundering statute. And any wealth-acquiring

crime with multiple participants would become money-

laundering when the initial recipient of the wealth gives

Cite as: 553 U. S. ____ (2008) 9

Opinion of SCALIA, J.

his confederates their shares.4 Generally speaking, any

specified unlawful activity, an episode of which includes

transactions which are not elements of the offense and in

which a participant passes receipts on to someone else,

would merge with money laundering. There are more than

250 predicate offenses for the money-laundering statute,

see Dept. of Justice, Bureau of Justice Statistics, M. Moti-

vans, Money Laundering Offenders 1994–2001, p. 2 (2003),

online at http://www.ojp.usdoj.gov/bjs/pub/pdf/mlo01.pdf (as

visited May 29, 2008, and available in Clerk of Court’s

case file), and many foreseeably entail such transactions,

see 18 U. S. C. §1956(c)(7) (establishing as predicate of-

fenses a number of illegal trafficking and selling offenses,

the expenses of which might be paid after the illegal

transportation or sale).

The Government suggests no explanation for why Con-

gress would have wanted a transaction that is a normal

part of a crime it had duly considered and appropriately

punished elsewhere in the Criminal Code to radically

increase the sentence for that crime. Interpreting “pro-

ceeds” to mean “profits” eliminates the merger problem.

Transactions that normally occur during the course of

running a lottery are not identifiable uses of profits and

thus do not violate the money-laundering statute. More

generally, a criminal who enters into a transaction paying

the expenses of his illegal activity cannot possibly violate

the money-laundering statute, because by definition prof-

its consist of what remains after expenses are paid. De-

fraying an activity’s costs with its receipts simply will not

be covered.

——————

4 The Solicitor General suggests that this is the case even under the

“profits” interpretation. See Reply Brief for United States 16; see also

post, at 15–16 (ALITO, J., dissenting). That is not so, because when the

“loot” comes into the hands of the later distributing felon his confeder-

ates’ shares are (as to him) not profits but mere receipts subject to his

payment of expenses.

10 UNITED STATES v. SANTOS

Opinion of SCALIA, J.

The principal dissent suggests that a solution to the

merger problem may be found in giving a narrow interpre-

tation to the “promotion prong” of the statute: A defendant

might be deemed not to “promote” illegal activity “by doing

those things . . . that are needed merely to keep the busi-

ness running,” post, at 18, because promotion (presuma-

bly) means doing things that will cause a business to grow.

See Webster’s 2d, p. 1981 (giving as one of the meanings of

“promote” “[t]o contribute to the growth [or] enlargement”

of something). (This argument is embraced by JUSTICE

BREYER’s dissent as well. See post, at 2.) The federal

money-laundering statute, however, bars not the bare act

of promotion, but engaging in certain transactions “with

the intent to promote the carrying on of specified unlawful

activity.” 18 U. S. C. §1956(a)(1)(A)(i) (emphasis added).

In that context the word naturally bears one of its other

meanings, such as “[t]o contribute to the . . . prosperity” of

something, or to “further” something. See Webster’s 2d,

p. 1981. Surely one promotes “the carrying on” of a gam-

bling enterprise by merely assuring that it continues in

business.5 In any event, to believe that this “narrow”

interpretation of “promote” would solve the merger prob-

lem one must share the dissent’s misperception that the

statute applies just to the conduct of ongoing enterprises

rather than individual unlawful acts. If the predicate act

is theft by an individual, it makes no sense to ask whether

an expenditure was intended to “grow” the culprit’s theft

——————

5 We note in passing the peculiarity that a dissent which rejects our

interpretation of “proceeds” because knowledge of profits will be diffi-

cult to prove, suggests an interpretation of “promotes” that will require

proving that a particular expenditure was intended, not merely to keep

a business “running,” but to expand it. (“You must decide, ladies and

gentlemen of the jury, whether it is true beyond a reasonable doubt

that the payoff of this winning bettor was not simply motivated by a

desire to bring him and other current gambling customers back, but

was meant to create a reputation for reliable payoff that would attract

future customers.”)

Cite as: 553 U. S. ____ (2008) 11

Opinion of SCALIA, J.

business. The merger problem thus stands as a major

obstacle to the dissent’s interpretation of “proceeds.”

JUSTICE BREYER admits that the merger problem casts

doubt on the Government’s position, post, at 1, but be-

lieves there are “other, more legally felicitous” solutions to

the problem, post, at 2. He suggests that the merger

problem could be solved by holding that “the money laun-

dering offense and the underlying offense that generated

the money to be laundered must be distinct in order to be

separately punishable.” Ibid. The insuperable difficulty

with this solution is that it has no basis whatever in the

words of the statute. Even assuming (as one should not)

the propriety of a judicial rewrite, why should one believe

that Congress wanted courts to avoid the merger problem

in that unusual fashion, rather than by adopting one of

the two possible meanings of an ambiguous term?

JUSTICE BREYER pins hope on the possibility, “if the

‘merger’ problem is essentially a problem of fairness in

sentencing,” that the United States Sentencing Commis-

sion might revise its recommended sentences for money

laundering. Post, at 2–3. See also principal dissent, post,

at 17–18 (in agreement). Even if that is a possibility, it is

not a certainty. And once again, why should one choose

this chancy method of solving the problem, rather than

interpret ambiguous language to avoid it? In any event,

as noted, supra, at 8, the merger problem affects more

than just sentencing; it affects charging decisions and

plea-bargaining as well.

B

The Government also argues for the “receipts” interpre-

tation because—quite frankly—it is easier to prosecute.

Proving the proceeds and knowledge elements of the fed-

eral money-laundering offense under the “profits” inter-

pretation will unquestionably require proof that is more

difficult to obtain. Essentially, the Government asks us to

12 UNITED STATES v. SANTOS

Opinion of SCALIA, J.

resolve the statutory ambiguity in light of Congress’s

presumptive intent to facilitate money-laundering prose-

cutions. That position turns the rule of lenity upside-

down. We interpret ambiguous criminal statutes in favor

of defendants, not prosecutors.

It is true that the “profits” interpretation demands more

from the Government than the “receipts” interpretation.

Not so much more, however, as to render such a disposi-

tion inconceivable—as proved by the fact that Congress

has imposed similar proof burdens upon the prosecution

elsewhere. See 18 U. S. C. §1963(a) (criminal forfeiture

provision requiring determination of “gross profits or other

proceeds”); 21 U. S. C. §853(a) (same).6 It is untrue that

the added burdens “serve no discernible purpose.” Post, at

12 (ALITO, J., dissenting). They ensure that the severe

money-laundering penalties will be imposed only for the

removal of profits from criminal activity, which permit the

leveraging of one criminal activity into the next. See

supra, at 7–8.

In any event, the Government exaggerates the difficul-

ties. The “proceeds of specified unlawful activity” are the

proceeds from the conduct sufficient to prove one predicate

offense. Thus, to establish the proceeds element under the

“profits” interpretation, the prosecution needs to show

only that a single instance of specified unlawful activity

was profitable and gave rise to the money involved in a

charged transaction. And the Government, of course, can

select the instances for which the profitability is clearest.

——————

6 The principal dissent claims that these statutes do not require proof

of profits because the Government could rely upon the “other proceeds”

prong, which the dissent interprets to mean all proceeds, gross profits

and everything else. See post, at 16. We do not normally interpret a

text in a manner that makes one of its provisions superfluous. But

even if we did, these provisions would still establish what the dissent

believes unthinkable: that Congress could envision the Government’s

proving profits.

Cite as: 553 U. S. ____ (2008) 13

Opinion of SCALIA, J.

Contrary to the principal dissent’s view, post, at 6, 11–12,

the factfinder will not need to consider gains, expenses,

and losses attributable to other instances of specified

unlawful activity, which go to the profitability of some

entire criminal enterprise. What counts is whether the

receipts from the charged unlawful act exceeded the costs

fairly attributable to it.7

When the Government charges an “enterprise” crime as

the predicate offense, see, e.g., 18 U. S. C. §1956(c)(7)(C), it

will have to prove the profitability of only the conduct

sufficient to violate the enterprise statute. That is typi-

cally defined as a “continuing series of violations,” 21

U. S. C. §848(c)(2), which would presumably be satisfied

by three violations, see Richardson v. United States, 526

U. S. 813, 818 (1999). Thus, the Government will have to

prove the profitability of just three offenses, selecting

(again) those for which profitability is clearest. And of

course a prosecutor will often be able to charge the under-

——————

7 The principal dissent asks, “[H]ow long does each gambling ‘in-

stance’ last?” Post, at 14. The answer is “as long as the Government

chooses to charge.” Title 18 U. S. C. §1955(a) provides that “[w]hoever

conducts, finances, manages, supervises, directs, or owns all or part of

an illegal gambling business shall be fined under this title or impris-

oned not more than five years, or both.” An illegal gambling business is

an illegal gambling business during each moment of its operation, and

it will be up to the Government to select that period of time for which it

can most readily establish the necessary elements of the charged

offenses, including (if money laundering is one of them) profitability.

(To the extent this raises the possibility of the Government’s making

multiple violations out of one person’s running of a single business, that

problem arises no matter what definition of “proceeds” is adopted.) The

“preposterous results” that the dissent attributes to our interpretation

of “proceeds,” post, at 14, are in fact the consequence of the Govern-

ment’s decision to charge Santos with conducting a gambling business

over a 6-year period. Of course in the vast majority of cases, establish-

ing the profitability of the predicate offense will not put the Govern-

ment to the task of identifying the relevant period. Most criminal

statutes prohibit discrete, individual acts (fraud, bank robbery) rather

than the conduct of a business.

14 UNITED STATES v. SANTOS

Opinion of SCALIA, J.

lying crimes instead of the overarching enterprise crime.

As for the knowledge element of the money-laundering

offense—knowledge that the transaction involves profits of

unlawful activity—that will be provable (as knowledge

must almost always be proved) by circumstantial evidence.

For example, someone accepting receipts from what he

knows to be a long-continuing drug-dealing operation can

be found to know that they include some profits. And a

jury could infer from a long-running launderer-criminal

relationship that the launderer knew he was hiding the

criminal’s profits. Moreover, the Government will be

entitled to a willful blindness instruction if the profes-

sional money launderer, aware of a high probability that

the laundered funds were profits, deliberately avoids

learning the truth about them—as might be the case when

he knows that the underlying crime is one that is rarely

unprofitable.

IV

Concurring in the judgment, JUSTICE STEVENS ex-

presses the view that the rule of lenity applies to this case

because there is no legislative history reflecting any legis-

lator’s belief about how the money-laundering statute

should apply to lottery operators. See post, at 3, 5. The

rule of lenity might not apply, he thinks, in a case involv-

ing an organized crime syndicate or the sale of contraband

because the legislative history supposedly contains some

views on the meaning of “proceeds” in those circum-

stances.8 See post, at 2–3, and n. 3. In short, JUSTICE

——————

8 JUSTICE STEVENS fails to identify the legislative history to which he

refers. He offers only: “As JUSTICE ALITO rightly argues, the legislative

history of §1956 makes it clear that Congress intended the term ‘pro-

ceeds’ to include gross revenues from the sale of contraband and the

operation of organized crime syndicates involving such sales.” Post, at

2–3. Although JUSTICE ALITO, from one item of legislative history,

draws an inference about the meaning of “proceeds” in all its applica-

tions (which we find dubious, see n. 3, supra), nowhere does he cite

Cite as: 553 U. S. ____ (2008) 15

Opinion of SCALIA, J.

STEVENS would interpret “proceeds” to mean “profits” for

some predicate crimes, “receipts” for others.

JUSTICE STEVENS’ position is original with him; neither

the United States nor any amicus suggested it; it has no

precedent in our cases. JUSTICE STEVENS relies on the

proposition that one undefined word, repeated in different

statutory provisions, can have different meanings in each

provision. See post, at 2, and n. 2. But that is worlds

apart from giving the same word, in the same statutory

provision, different meanings in different factual contexts.

Not only have we never engaged in such interpretive

contortion; just over three years ago, in an opinion joined

by JUSTICE STEVENS, we forcefully rejected it. Clark v.

Martinez, 543 U. S. 371 (2005), held that the meaning of

words in a statute cannot change with the statute’s appli-

cation. See id., at 378. To hold otherwise “would render

every statute a chameleon,” id., at 382, and “would estab-

lish within our jurisprudence . . . the dangerous principle

that judges can give the same statutory text different

meanings in different cases,” id., at 386. Precisely to avoid

that result, our cases often “give a statute’s ambiguous

language a limiting construction called for by one of the

statute’s applications, even though other of the statute’s

applications, standing alone, would not support the same

limitation. The lowest common denominator, as it were,

must govern.” Id., at 380 (emphasis added).

Our obligation to maintain the consistent meaning of

words in statutory text does not disappear when the rule

of lenity is involved. To the contrary, we have resolved an

ambiguity in a tax statute in favor of the taxpayer in a

civil case because the statute had criminal applications

——————

legislative history addressing the meaning of the word “proceeds” in

cases specifically involving contraband or organized crime. Thus

JUSTICE STEVENS’ concurrence appears to address not only a hypotheti-

cal case, see infra, at 16, but even an imagined legislative history.

16 UNITED STATES v. SANTOS

Opinion of SCALIA, J.

that triggered the rule of lenity. See United States v.

Thompson/Center Arms Co., 504 U. S. 505, 517–518, and

n. 10 (1992) (plurality opinion). If anything, the rule of

lenity is an additional reason to remain consistent, lest

those subject to the criminal law be misled. And even if,

as JUSTICE STEVENS contends, post, at 1, statutory ambi-

guity “effectively” licenses us to write a brand-new law, we

cannot accept that power in a criminal case, where the law

must be written by Congress. See United States v. Hud-

son, 7 Cranch 32, 34 (1812).

We think it appropriate to add a word concerning the

stare decisis effect of JUSTICE STEVENS’ opinion. Since his

vote is necessary to our judgment, and since his opinion

rests upon the narrower ground, the Court’s holding is

limited accordingly. See Marks v. United States, 430 U. S.

188, 193 (1977). But the narrowness of his ground con-

sists of finding that “proceeds” means “profits” when there

is no legislative history to the contrary. That is all that

our judgment holds. It does not hold that the outcome is

different when contrary legislative history does exist.

JUSTICE STEVENS’ speculations on that point address a

case that is not before him, are the purest of dicta, and

form no part of today’s holding. Thus, as far as this par-

ticular statute is concerned, counsel remain free to argue

JUSTICE STEVENS’ view (and to explain why it does not

overrule Clark v. Martinez, supra). They should be

warned, however: Not only do the Justices joining this

opinion reject that view, but so also (apparently) do the

Justices joining the principal dissent. See post, at 2, 17.

V

The money-laundering charges brought against Santos

were based on his payments to the lottery winners and his

employees, and the money-laundering charge brought

against Diaz was based on his receipt of payments as an

employee. Neither type of transaction can fairly be char-

Cite as: 553 U. S. ____ (2008) 17

Opinion of SCALIA, J.

acterized as involving the lottery’s profits. Indeed, the

Government did not try to prove, and respondents have

not admitted, that they laundered criminal profits. We

accordingly affirm the judgment of the Court of Appeals.

It is so ordered.

Cite as: 553 U. S. ____ (2008) 1

STEVENS, J., concurring in judgment

SUPREME COURT OF THE UNITED STATES

_________________

No. 06–1005

_________________

UNITED STATES, PETITIONER v. EFRAIN

SANTOS AND BENEDICTO DIAZ

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE SEVENTH CIRCUIT

[June 2, 2008]

JUSTICE STEVENS, concurring in the judgment.

When Congress fails to define potentially ambiguous

statutory terms, it effectively delegates to federal judges

the task of filling gaps in a statute. See Commissioner v.

Fink, 483 U. S. 89, 104 (1987) (STEVENS, J., dissenting)

(“In the process of legislating it is inevitable that Congress

will leave open spaces in the law that the courts are im-

plicitly authorized to fill”). Congress has included defini-

tions of the term “proceeds” in some criminal statutes,1 but

it has not done so in 18 U. S. C. §1956 (2000 ed. and Supp.

V), the money laundering statute at issue in this case.

That statute is somewhat unique because it applies to the

proceeds of a varied and lengthy list of specified unlawful

activities, see §1956(c)(7) (defining “specified unlawful

activity” to include, inter alia, controlled substance viola-

tions, murder, bribery, smuggling, various forms of fraud,

concealment of assets, various environmental offenses,

and health care offenses).

Although it did not do so, it seems clear that Congress

could have provided that the term “proceeds” shall have

——————

1 For example, 18 U. S. C. §2339C(e)(3) (2000 ed., Supp. V), which

prohibits the concealment of proceeds derived from funds used to

support terrorism, defines “proceeds” to mean “any funds derived from

or obtained, directly or indirectly, through the commission of [the]

offense.”

2 UNITED STATES v. SANTOS

STEVENS, J., concurring in judgment

one meaning when referring to some specified unlawful

activities and a different meaning when referring to oth-

ers. In fact, in the general civil forfeiture statute, §981,

Congress did provide two different definitions of “pro-

ceeds,” recognizing that—for a subset of activities—

“proceeds” must allow for the deduction of costs. Compare

§981(a)(2)(A) (2000 ed.) (defining “proceeds” in cases in-

volving illegal goods and services to mean “property of any

kind obtained directly or indirectly . . . not limited to the

net gain or profit realized from the offense”) with

§981(a)(2)(B) (defining “proceeds” with respect to lawful

goods sold in an illegal manner as the amount of money

acquired “less the direct costs incurred in providing the

goods or services”).

We have previously recognized that the same word can

have different meanings in the same statute.2 If Congress

could have expressly defined the term “proceeds” differ-

ently when applied to different specified unlawful activi-

ties, it seems to me that judges filling the gap in a statute

with such a variety of applications may also do so, as long

as they are conscientiously endeavoring to carry out the

intent of Congress. Therefore, contrary to what JUSTICE

ALITO and the plurality state, see post, at 17 (dissenting

opinion); ante, at 15-16 (plurality opinion), this Court need

not pick a single definition of “proceeds” applicable to

every unlawful activity, no matter how incongruous some

applications may be.

As JUSTICE ALITO rightly argues, the legislative history

of §1956 makes it clear that Congress intended the term

“proceeds” to include gross revenues from the sale of con-

traband and the operation of organized crime syndicates

——————

2 See,

e.g., General Dynamics Land Systems, Inc. v. Cline, 540 U. S.

581, 595 (2004) (rejecting the presumption that the term “age” had an

identical meaning throughout the Age Discrimination in Employment

Act of 1967).

Cite as: 553 U. S. ____ (2008) 3

STEVENS, J., concurring in judgment

involving such sales.3 But that history sheds no light on

how to identify the proceeds of many other types of speci-

fied unlawful activities. For example, one specified unlaw-

ful activity is the conduct proscribed by §541, “Entry of

goods falsely classified.” Section 541 provides that

“[w]hoever knowingly effects any entry of goods, wares, or

merchandise, at less than the true weight or measure

thereof, or upon a false classification as to quality or

value, or by the payment of less than the amount of duty

legally due, shall be . . . imprisoned not more than two

years.” Conceivably the “proceeds” stemming from a

violation of §541 could be either the money realized by

misstating the value—that is, the amount by which the

criminal “profits” by paying reduced duties—or the total

price at which the goods are later sold, even though the

misclassification had only a trivial impact on that price.

Just as the legislative history fails to tell us how to

calculate the “proceeds” of violations of §541, it is equally

silent on the proceeds of an unlicensed stand-alone gam-

bling venture. The consequences of applying a “gross

receipts” definition of “proceeds” to the gambling operation

conducted by respondents are so perverse that I cannot

believe they were contemplated by Congress, particularly

given the fact that nothing in JUSTICE ALITO’s thorough

review of the legislative history indicates otherwise.4

Constrained by a holding that the payment of expenses

constitutes “promotion,”5 JUSTICE ALITO’s opinion runs

——————

3 Thus, I cannot agree with the plurality that the rule of lenity must

apply to the definition of “proceeds” for these types of unlawful activities.

4 As JUSTICE ALITO notes, some reference was made in the legislative

history to gambling as a part of a broader criminal syndicate’s activities.

Post, at 10. But that reference does not indicate that Congress intended

the “proceeds” of a gambling business to include gross receipts.

5 The Seventh Circuit held on a prior appeal that respondent Santos’

actions were legally sufficient to convict him of promoting the carrying

on of a business under §1956, United States v. Febus, 218 F. 3d 784,

789–790 (2000). JUSTICE ALITO criticizes the plurality for allowing the

4 UNITED STATES v. SANTOS

STEVENS, J., concurring in judgment

squarely into what can be characterized as the “merger”

problem. Allowing the Government to treat the mere

payment of the expense of operating an illegal gambling

business as a separate offense is in practical effect tanta-

mount to double jeopardy, which is particularly unfair in

this case because the penalties for money laundering are

substantially more severe than those for the underlying

offense of operating a gambling business. A money laun-

dering conviction increases the statutory maximum from 5

to 20 years, and the Sentencing Commission has pre-

scribed different Guidelines ranges for the two crimes.6

When a defendant has a significant criminal history or

Guidelines enhancements apply, the statutory cap of five

years in §1955 is an important limitation on a defendant’s

sentence—a limitation that would be eviscerated if

JUSTICE ALITO’s definition of “proceeds” were applied in

this case.

JUSTICE ALITO and JUSTICE BREYER suggest that the

advisory nature of the Guidelines post-Booker, United

States v. Booker, 543 U. S. 220 (2005), or the possibility of

an amendment to the money laundering Guideline, would

soften this blow, post, at 17-18 (opinion of ALITO, J.); post,

at 2–3 (opinion of BREYER, J.), and indeed they could. But

——————

interpretation of “proceeds” to be “dictated by an unreviewed interpre-

tation of another statutory element.” See post, at 18. I do not base my

opinion on any disagreement with the interpretation of “promotion.”

6 For example, under the 2007 Guidelines, the base offense level for

running a gambling business is 12. United States Sentencing Commis-

sion, Guidelines Manual §2E3.1 (Nov. 2007) (USSG). Section 2S1.1,

which provides the base offense level for money laundering, adds 2

levels to the base offense level for the underlying crime where the

defendant is convicted under 18 U. S. C. §1956. This scheme for

determining the base offense level first appeared in the November 2001

Sentencing Guidelines. Prior to 2001, the difference between sentences

for gambling and money laundering was even more pronounced, as

USSG §2S1.1 (Nov. 2000) set an offense level of 23, which could be

increased if the value of the funds exceeded $100,000.

Cite as: 553 U. S. ____ (2008) 5

STEVENS, J., concurring in judgment

the result in the case at hand might not be softened at all

by resort to Booker because respondents’ direct appeal was

decided in 2000, several years prior to our decision in

Booker. If JUSTICE ALITO’s opinion were to carry the day,

both respondents would return to prison to serve the

remainder of their lengthy sentences.

The revenue generated by a gambling business that is

used to pay the essential expenses of operating that busi-

ness is not “proceeds” within the meaning of the money

laundering statute. As the plurality notes, there is “no

explanation for why Congress would have wanted a trans-

action that is a normal part of a crime it had duly consid-

ered and appropriately punished elsewhere in the Crimi-

nal Code, to radically increase the sentence for that

crime.” Ante, at 9. This conclusion dovetails with what

common sense and the rule of lenity would require. Faced

with both a lack of legislative history speaking to the

definition of “proceeds” when operating a gambling busi-

ness is the “specified unlawful activity” and my conviction

that Congress could not have intended the perverse result

that would obtain in this case under JUSTICE ALITO’s

opinion, the rule of lenity may weigh in the determination.

And in that respect the plurality’s opinion is surely per-

suasive.7 Accordingly, I concur in the judgment.

——————

7 In what can only be characterized as the “purest of dicta,” the plu-

rality speculates about the stare decisis effect of our judgment and

interprets my conclusion as resting on the ground that “ ‘proceeds’

means ‘profits’ when there is no legislative history to the contrary.”

Ante, at 16. That is not correct; my conclusion rests on my conviction

that Congress could not have intended the perverse result that the

dissent’s rule would produce if its definition of “proceeds” were applied

to the operation of an unlicensed gambling business. In other applica-

tions of the statute not involving such a perverse result, I would pre-

sume that the legislative history summarized by JUSTICE ALITO reflects

the intent of the enacting Congress. See post, at 2 and n. 1 (opinion of

ALITO, J.). Its decision to leave the term undefined is consistent with

my view that “proceeds” need not be given the same definition when

6 UNITED STATES v. SANTOS

STEVENS, J., concurring in judgment

——————

applied to each of the numerous specified unlawful activities that

produce unclean money. Clark v. Martinez, 543 U. S. 371 (2005), poses

no barrier to this conclusion. In Martinez there was no compelling

reason—in stark contrast to the situation here—to believe that Con-

gress intended the result for which the Government argued.

Cite as: 553 U. S. ____ (2008) 1

BREYER, J., dissenting

SUPREME COURT OF THE UNITED STATES

_________________

No. 06–1005

_________________

UNITED STATES, PETITIONER v. EFRAIN

SANTOS AND BENEDICTO DIAZ

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE SEVENTH CIRCUIT

[June 2, 2008]

JUSTICE BREYER, dissenting.

I join JUSTICE ALITO’s dissent while adding the follow-

ing observations about what has been referred to as the

“ ‘merger problem.’ ” Ante, at 8 (plurality opinion). Like

the plurality, I doubt that Congress intended the money

laundering statute automatically to cover financial trans-

actions that constitute an essential part of a different

underlying crime. Operating an illegal gambling business,

for example, inevitably involves investment in overhead as

well as payments to employees and winning customers; a

drug offense normally involves payment for drugs; and

bank robbery may well require the distribution of stolen

cash to confederates. If the money laundering statute

applies to this kind of transaction (i.e., if the transaction is

automatically a “financial transaction” that “involves the

proceeds of specified unlawful activity” made “with the

intent to promote the carrying on of specified unlawful

activity”), then the Government can seek a heavier money

laundering penalty (say, 20 years), even though the only

conduct at issue is conduct that warranted a lighter pen-

alty (say, 5 years for illegal gambling). 18 U. S. C.

§1956(a)(1).

It is difficult to understand why Congress would have

intended the Government to possess this punishment-

transforming power. Perhaps for this reason, the Tenth

2 UNITED STATES v. SANTOS

BREYER, J., dissenting

Circuit has written that “Congress aimed the crime of

money laundering at conduct that follows in time the

underlying crime rather than to afford an alternative

means of punishing the prior ‘specified unlawful activity.’ ”

United States v. Edgmon, 952 F. 2d 1206, 1214 (1991).

And, in 1997, the United States Sentencing Commission

told Congress that it agreed with the Department of Jus-

tice that “money laundering cannot properly be charged

for ‘merged’ transactions that are part of the underly-

ing crime.” Report to Congress: Sentencing Policy for

Money Laundering Offenses, including Comments on a

Dept. of Justice Report, p. 16 (Sept. 1997), online at http://

www.ussc.gov/r_congress/launder.pdf (as visited May 20,

2008, and available in Clerk of Court’s case file).

Thus, like the plurality, I see a “merger” problem. But,

unlike the plurality, I do not believe that we should look to

the word “proceeds” for a solution. For one thing, the

plurality’s interpretation of that word creates the serious

logical and practical difficulties that JUSTICE ALITO de-

scribes. See post, at 7–12 (dissenting opinion) (describing

difficulties associated with proof and accounting). For

another thing, there are other, more legally felicitous

places to look for a solution. The Tenth Circuit, for exam-

ple, has simply held that the money laundering offense

and the underlying offense that generated the money to be

laundered must be distinct in order to be separately pun-

ishable. Edgmon, supra, at 1214. Alternatively the

money laundering statute’s phrase “with the intent to

promote the carrying on of specified unlawful activity”

may not apply where, for example, only one instance of

that underlying activity is at issue. (The Seventh Circuit

on a prior appeal in this case rejected that argument, and

thus we do not consider it here. See United States v.

Febus, 218 F. 3d 784, 789 (2000).)

Finally, if the “merger” problem is essentially a problem

of fairness in sentencing, the Sentencing Commission has

Cite as: 553 U. S. ____ (2008) 3

BREYER, J., dissenting

adequate authority to address it. Congress has instructed

the Commission to “avoi[d] unwarranted sentencing dis-

parities” among those “found guilty of similar criminal

conduct.” 28 U. S. C. §991(b)(1)(B) (emphasis added); see

also §994(f) (instructing the Commission to pay particular

attention to those disparities). The current money laun-

dering Guideline, United States Sentencing Commission,

Guidelines Manual §2S1.1 (Nov. 2007) (USSG), by making

no exception for a situation where nothing but a single

instance of the underlying crime has taken place, would

seem to create a serious and unwarranted disparity among

defendants who have engaged in identical conduct. My

hope is that the Commission’s past efforts to tie more

closely the offense level for money laundering to the of-

fense level of the underlying crime, see id., Supp. to App.

C, Amdt. 634 (Nov. 2001), suggest a willingness to con-

sider directly this kind of disparity. Such an approach

could solve the “merger” problem without resort to creat-

ing complex interpretations of the statute’s language. And

any such solution could be applied retroactively. See 28

U. S. C. §994(u).

In light of these alternative possibilities, I dissent.

Cite as: 553 U. S. ____ (2008) 1

ALITO, J., dissenting

SUPREME COURT OF THE UNITED STATES

_________________

No. 06–1005

_________________

UNITED STATES, PETITIONER v. EFRAIN

SANTOS AND BENEDICTO DIAZ

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE SEVENTH CIRCUIT

[June 2, 2008]

JUSTICE ALITO, with whom THE CHIEF JUSTICE, JUSTICE

KENNEDY, and JUSTICE BREYER join, dissenting.

Fairly read, the term “proceeds,” as used in the principal

federal money laundering statute, 18 U. S. C. §1956(a),

means “the total amount brought in,” the primary diction-

ary definition. Webster’s Third New International Dic-

tionary 1807 (1976) (hereinafter Webster’s 3d). See also

Random House Dictionary of the English Language 1542

(2d ed. 1987) (“the total sum derived from a sale or other

transaction”). The plurality opinion, however, makes no

serious effort to interpret this important statutory term.

Ignoring the context in which the term is used, the prob-

lems that the money laundering statute was enacted to

address, and the obvious practical considerations that

those responsible for drafting the statute almost certainly

had in mind, that opinion is quick to pronounce the term

hopelessly ambiguous and thus to invoke the rule of lenity.

Concluding that “proceeds” means “profits,” the plurality

opinion’s interpretation would frustrate Congress’ intent

and maim a statute that was enacted as an important

defense against organized criminal enterprises.

2 UNITED STATES v. SANTOS

ALITO, J., dissenting

Fortunately, JUSTICE STEVENS’s opinion recognizes that

the term “proceeds” “include[s] gross revenues from the

sale of contraband and the operation of organized crime

syndicates involving such sales.” Ante, at 2–3 (opinion

concurring in judgment).1 I cannot agree with JUSTICE

STEVENS’s approach insofar as it holds that the meaning of

the term “proceeds” varies depending on the nature of the

illegal activity that produces the laundered funds, but at

least that approach preserves the correct interpretation of

the statute in most of the cases that were the focus of

congressional concern when the money laundering statute

was enacted.

I

A

While the primary definition of the term “proceeds” is

“the total amount brought in,” I recognize that the term

may also be used to mean “net profit,” Webster’s 3d 1807,

and I do not suggest that the question presented in this

case can be answered simply by opening a dictionary.

When a word has more than one meaning, the meaning

that is intended is often made clear by the context in

which the word is used, and thus in this case, upon finding

that the term “proceeds” may mean both “the total amount

brought in” and “net profit,” the appropriate next step is

not to abandon any effort at interpretation and summon in

the rule of lenity. Rather, the next thing to do is to ask

what the term “proceeds” customarily means in the con-

text that is relevant here—a money laundering statute.

The federal money laundering statute is not the only

money laundering provision that uses the term “proceeds.”

On the contrary, the term is a staple of money laundering

——————

1 In

light of the plurality opinion’s discussion of “the stare decisis

effect of JUSTICE STEVENS’ opinion,” ante, at 16, it must be noted that

five Justices agree with the position taken by JUSTICE STEVENS on the

matter discussed in the preceding sentence of the text.

Cite as: 553 U. S. ____ (2008) 3

ALITO, J., dissenting

laws, and it is instructive that in every single one of these

provisions in which the term “proceeds” is defined—and

there are many—the law specifies that “proceeds” means

“the total amount brought in.”

The leading treaty on international money laundering,

the United Nations Convention Against Transnational

Organized Crime (Convention), Nov. 15, 2000, 2225

U. N. T. S. 209 (Treaty No. I–39574), which has been

adopted by the United States and 146 other countries,2 is

instructive. This treaty contains a provision that is very

similar to §1956(a)(1)(B)(i). Article 6.1 of the Convention

obligates signatory nations to criminalize “[t]he . . . trans-

fer of property, knowing that such property is the proceeds

of crime, for the purpose of concealing or disguising the

illicit origin of the property or of helping any person who is

involved in the commission of the predicate offence to

evade the legal consequences of his or her action.” Id., at

277 (emphasis added). The Convention defines the term

“proceeds” to mean “any property derived from or ob-

tained, directly or indirectly, through the commission of an

offence.” Id., at 275 (Art. 2(e)). The money laundering

provision of the Convention thus covers gross receipts.3

——————

2 See Multilateral Treaties Deposited with the Secretary-General,

pt. I, ch. XVIII, No. 12, United Nations Convention against Transna-

tional Crime (Nov. 15, 2007), online at http://untreaty.un.org/

ENGLISH / bible / englishinternetbible / partI /chapterXVIII/ treaty13.asp

(all Internet materials as visited May 29, 2008, and available in Clerk

of Court’s case file).

3 If 18 U. S. C. §1956 were limited to profits, it would be narrower

than the obligation that the United States undertook in Article 6.1 of

the Convention, but the Department of State has taken the position

that no new legislation is needed to bring the United States into com-

pliance. See Hearing on Law Enforcement Treaties before the Senate

Committee on Foreign Relations, 108th Cong., 2d Sess., 10 (2004)

(statement of Samuel M. Witten, Deputy Legal Adviser (“[W]e can

comply with the Convention’s criminalization obligations without the

need for new legislation”)).

4 UNITED STATES v. SANTOS

ALITO, J., dissenting

The term “proceeds” is given a similarly broad scope in

the Model Money Laundering Act (Model Act). See Presi-

dent’s Commission on Model State Drug Laws, Economic

Remedies, §C (1993). Section 5(a)(1) of the Model Act

criminalizes transactions involving property that is “the

proceeds of some form of unlawful activity,” and the Model

Act defines “proceeds” as “property acquired or derived

directly or indirectly from, produced through, realized

through, or caused by an act or omission . . . includ[ing]

any property of any kind,” §4(a).

Fourteen States have money laundering statutes that

define the term “proceeds,” and in every one of these laws

the term is defined in a way that encompasses gross re-

ceipts. See Ariz. Rev. Stat. Ann. §§13–2314(N)(3) (West

2001), 13–2317(F)(4)(b) (West Supp. 2007); Ark. Code Ann.

§5–42–203(5) (2006); Cal. Health & Safety Code Ann.

§11370.9(h)(1) (West 2007); Haw. Rev. Stat. §§708A–2,

708A–3 (2007); Ind. Code §§35–45–15–4, 35–45–15–5

(West 2004); Iowa Code §§706B.1(1), 706B.2 (2005); La.

Stat. Ann. §14:230(A)(4) (West 2004); Mich. Comp. Laws

Ann. §§750.411j(f), 750.411j (West 2004); N. M. Stat. Ann.

§§30–51–2(E), 30–51–4(A) (2004); Ohio Rev. Code Ann.

§§1315.51(H), 1315.55 (Lexis 2006); Tex. Penal Code

§§34.01(4), 34.02 (West Supp. 2007); Utah Code Ann.

§§76–10–1902(9), 76–10–1903 (West 2007); Va. Code Ann.

§§18.2–246.2, 18.2–246.3 (Lexis 2004); Wash. Rev. Code

§§9A.83.010(5), 9A.83.020 (2006). Cf. N. J. Stat. Ann.

§2C:21–25(d) (West 2005).4

——————

4 Connecticut,the only State with a money laundering statute that

does not use the term “proceeds,” uses equivalent language that is not

limited to profits. See Conn. Gen. Stat. §53a–276 (2005) (“A person is

guilty for money laundering in the first degree when he exchanges . . .

one or more monetary instruments derived from criminal conduct

constituting a felony”). I have found no money laundering statute that

defines “proceeds” to mean profits or that uses other language that

limits the law’s reach to profits or net income.

Cite as: 553 U. S. ____ (2008) 5

ALITO, J., dissenting

This pattern of usage is revealing. It strongly suggests

that when lawmakers, knowledgeable about the nature

and problem of money laundering, use the term “proceeds”

in a money laundering provision, they customarily mean

for the term to reach all receipts and not just profits.5

B

There is a very good reason for this uniform pattern of

usage. Money laundering provisions serve two chief ends.

First, they provide deterrence by preventing drug traffick-

ers and other criminals who amass large quantities of cash

——————

The only state money laundering statute the even uses the term

“profits,” “net income,” or something similar is that of Arkansas, which

plainly defines “criminal proceeds” to include all gross receipts of

criminal conduct: “ ‘Criminal proceeds’ means: (A) Anything of value

furnished or intended to be furnished in exchange for criminal conduct

or contraband received in violation of state or federal law; and (B)

Property or profits traceable to” such an exchange. Ark. Code Ann. §5–

42–203(5) (2006).

5 The version of the money laundering statute originally passed by

the House reflected a similar legislative judgment. The bill made it a

crime to engage in financial transactions and certain commercial

transactions involving “criminally derived property that is derived from

a designated offense.” H. R. 5484, 99th Cong., 2d Sess., §602, p. 154

(1986) (as introduced). The term “criminally derived property” is

naturally understood to include all property that is “receive[d]” or

“obtain[ed]” as a result of criminal activity, see Webster’s 3d 609;

Random House Dictionary of the English Language 389 (1967), and

thus to include all gross receipts and not just profit. The House bill

defined the term “criminally derived property” to mean “any property

constituting, or derived from, proceeds obtained from a criminal of-

fense.” H. R. 5484, §602, at 158 (emphasis added). Accordingly, the

House seems to have understood “proceeds” to include gross receipts.

The bill passed by the Senate, like the current money laundering

statute, simply used the term “proceeds,” S. 2683, 99th Cong., 2d Sess.,

§2(a) (1986), and the House acceded to the Senate version. See H. R.

5484, 99th Cong., 2d Sess., §1352, p. 48 (1986) (as enacted). There is no

suggestion in the legislative history that the term “criminally derived

property” and the term “proceeds” were perceived as having different

meanings.

6 UNITED STATES v. SANTOS

ALITO, J., dissenting

from using these funds “to support a luxurious lifestyle” or

otherwise to enjoy the fruits of their crimes. Model Act,

Policy Statement, p. C–105. See President’s Commission

on Organized Crime, Interim Report to President and

Attorney General, The Cash Connection: Organized

Crime, Financial Institutions, and Money Laundering 7–8

(Oct. 1984) (hereinafter Interim Report); Aranson, Bouker,

& Hannon, Money Laundering, 31 Am. Crim. L. Rev. 721,

721–722 (1994); H. R. Rep. No. 99–746, p. 16 (1986) (here-

inafter H. R. Rep.). Second, they inhibit the growth of

criminal enterprises by preventing the use of dirty money

to promote the enterprise’s growth. See, e.g., 18 U. S. C.

§§1956(a)(1)(A)(i), (a)(2)(A), and (a)(3)(A); Model Act

§§5(a)(2), (4); N. J. Stat. Ann. §2C:21–25(b)(1); Tex. Penal

Code §§34.02(a)(3)–(4).

Both of these objectives are frustrated if a money laun-

dering statute is limited to profits. Dirty money may be

used to support “a luxurious lifestyle” and to grow an

illegal enterprise whenever the enterprise possesses large

amounts of illegally obtained cash. And illegal enterprises

may acquire such cash while engaging in unlawful activity

that is unprofitable.

Suppose, for example, that a drug cartel sends a large

shipment of drugs to this country, a good part of the ship-

ment is intercepted, the remainder is sold, the cartel ends

up with a net loss but with a large quantity of cash on its

hands, and the cartel uses the cash in financial transac-

tions that are designed to conceal the source of the cash or

to promote further crime. There is no plausible reason

why Congress would not have wanted the money launder-

ing statute to apply to these financial transactions. If the

cartel leaders use the money to live in luxury, this pro-

vides an incentive for these individuals to stay in the

business and for others to enter. If the cartel uses the

money to finance future drug shipments or to expand the

business, public safety is harmed.

Cite as: 553 U. S. ____ (2008) 7

ALITO, J., dissenting

It is certainly true that Congress, in enacting the federal

money laundering statute, was primarily concerned about

criminal enterprises that realize profits. A criminal op-

eration that consistently loses money will not last very

long and thus presents a lesser danger than a profitable

operation. But narrowing a money laundering statute so

that it reaches only profits produces two perverse results

that Congress cannot have wanted. First, it immunizes

successful criminal enterprises during those periods when

they are operating temporarily in the red. Second, and

more important, it introduces pointless and difficult prob-

lems of proof. Because the dangers presented by money

laundering are present whenever criminals have large

stores of illegally derived funds on their hands, there is

little reason to require proof—which may be harder to

assemble than the plurality opinion acknowledges—that

the funds represent profits.

C

The implausibility of a net income interpretation is

highlighted in cases involving professionals and others

who are hired to launder money. Those who are knowl-

edgeable about money laundering stress the importance of

prosecuting these hired money launderers. See, e.g.,

Depts. of Treasury and Justice, The 2001 National Money

Laundering Strategy, pp. ix–x, 1–2 (Sept. 2001), online at

http://www.treas.gov/press/releases/docs/ml2001.pdf; Fi-

nancial Action Task Force on Money Laundering, 1996–

1997 Report on Money Laundering Typologies 7 (Feb.

1997), online at http://www.fatf-gafi.org/dataoecd/31/29/

34043795.pdf; Butterworths International Guide to Money

Laundering Law and Practice 629 (T. Graham 2d ed.

2003); Ratliff, Third Party Money Laundering: Problems of

Proof and Prosecutorial Discretion, 7 Stan. L. & Policy

Rev. 173 (1996); Sultzer, Money Laundering: The Scope of

the Problem and Attempts to Combat It, 63 Tenn. L. Rev.

8 UNITED STATES v. SANTOS

ALITO, J., dissenting

143, 147–148 (1995); H. R. Rep., at 16–17.

A net income interpretation would risk hamstringing

such prosecutions. To violate 18 U. S. C. §1956(a), a de-

fendant must “kno[w] the property involved in a financial

transaction represents the proceeds of some form of

unlawful activity.” A professional money launderer is not

likely to know (or perhaps even to care) whether the en-

terprise is operating in the black when the funds in ques-

tion were acquired. Therefore, under a net income inter-

pretation, financial specialists and others who are hired to

launder funds would generally be beyond the reach of the

statute, something that Congress almost certainly did not

intend.

It is revealing that the money laundering statute explic-

itly provides that a money launderer need only know that

“the property involved in the transaction represented

proceeds from some form, though not necessarily which

form, of [specified illegal] activity.” §1956(c)(1). Thus, the

prosecution is not required to prove that a hired money

launderer knew that funds provided for laundering de-

rived from, say, drug sales as opposed to gambling. There

is no reason to think that hired money launderers are

more likely to know whether funds include profits than

they are to know the nature of the illegal activity from

which the funds were derived. Consequently, §1956(c)

suggests that Congress did not intend to require proof that

a hired money launderer knew that funds provided for

laundering included profits.

The plurality opinion dismisses these concerns with the

observation that a jury may infer that a hired launderer

knew that funds included profits if the launderer had a

long-running relationship with the entity or person provid-

ing the funds or knew that the entity or person had been

involved in the illegal enterprise for a lengthy period. See

ante, at 14. But what about the case where the launderer

accepts a million dollars of drug money on a single occa-

Cite as: 553 U. S. ____ (2008) 9

ALITO, J., dissenting

sion? And even if there would be legally sufficient evi-

dence to support an inference of the requisite knowledge

under the circumstances that the plurality opinion posits,

the requirement of convincing a jury to find beyond a

reasonable doubt that the funds included profits would

pose a troublesome and (in light of the aim of the money

laundering statute) pointless obstacle.

D

Even in cases in which the defendants are alleged to

have been involved in the underlying criminal activity, a

net income interpretation would produce nettlesome prob-

lems that Congress cannot have wanted. These problems

may be especially acute in the very cases that money

laundering statutes principally target, that is, cases in-

volving large-scale criminal operations that continue over

a substantial period of time, particularly drug cartels and

other organized crime syndicates.

The federal money laundering statute was enacted in

the wake of an influential report by the President’s Com-

mission on Organized Crime that focused squarely on

criminal enterprises of this type. See Interim Report 7–8

(described in S. Rep. No. 99–433, pp. 2–4 (1986) (hereinaf-

ter S. Rep.) and H. R. Rep., at 16). The Commission iden-

tified drug traffickers and other organized criminal groups

as presenting the most serious problems. See Interim

Report 7. The Commission found that “narcotics traffick-

ers, who must conceal billions of dollars in cash from

detection by the government, create by far the greatest

demand for money laundering services” but that “numer-

ous other types of activities typical of organized crime,

such as loansharking and gambling, also create an appre-

ciable demand for such schemes.” Ibid. To illustrate the

scope and nature of the money laundering problem, a

section of the Interim Report was devoted to case studies,

most of which involved the laundering of drug money. Id.,

10 UNITED STATES v. SANTOS

ALITO, J., dissenting

at 29–49.

As a prime example of the problem of money laundering,

the report discussed the so-called “Pizza Connection” case

that was prosecuted in federal court in New York City in

the 1980’s. In that case, the evidence showed that the

Sicilian Mafia and organized crime elements in the United

States, over a period of many years, imported huge

amounts of heroin into this country, sold the heroin here,

accumulated millions of dollars of cash, and then laun-

dered the funds by smuggling them overseas in suitcases

or funneling the money through a maze of bank accounts.

See id., at 31–35; United States v. Casamento, 887 F. 2d

1141, 1148–1149 (CA2 1989).

Following the issuance of the Interim Report, Congress

turned its attention to the problem of money laundering,

and much of the discussion focused on the need to prevent

laundering by drug and organized crime syndicates. See,

e.g., S. Rep., at 3 (discussing “organized crime ‘businesses’

such as gambling, prostitution, and loansharking”), 4

(“Money laundering is a crucial financial underpinning of

organized crime and narcotics trafficking” (internal quota-

tion marks omitted)); Hearing on Money Laundering

Legislation before the Senate Committee on the Judiciary,

99th Cong., 1st Sess., 1 (1985) (statement of Chairman

Thurmond); id., at 29 (statement of Sen. Biden), 30 (state-

ment of Sen. DeConcini), 31 (statement of Sen. D’Amato),

53 (statement of Assistant Attorney General Trott).

In light of these concerns, it is most unlikely that Con-

gress meant to enact a money laundering statute that

would present daunting obstacles in the very sort of cases

that had been identified as presenting the most pressing

problems, that is, cases, like the “Pizza Connection” case,

in which law enforcement intercepts cash or wire transfers

of funds derived from drug sales or other unlawful activity

that occurred over a period of time. The plurality opin-

ion’s interpretation of the term “proceeds,” however, would

Cite as: 553 U. S. ____ (2008) 11

ALITO, J., dissenting

often produce such problems. Tracing funds back to par-

ticular drug sales and proving that these sales were prof-

itable will often prove impossible. See United States v.

Bajakajian, 524 U. S. 321, 351–352 (1998) (KENNEDY, J.,

dissenting). Indeed, it will often be hard even to establish

with any precision the period of time during which the

drug sales occurred. But assuming that the Government

can prove roughly when the funds were acquired, the next

hurdle would be to show that the drug ring had net income

during the time when the funds were acquired.

“Net income” means “[t]he excess of revenues over all

related expenses for a given period.” R. Estes, Dictionary

of Accounting 88 (1981) (emphasis deleted). There are no

generally accepted accounting principles for determining

the net income of illegal enterprises, and therefore, in

order to apply a net income interpretation, special ac-

counting rules would have to be developed.

In the drug-money cases that I have been discussing,

the courts would have to decide whether the drug syndi-

cate’s net income should be calculated on an annual, quar-

terly, or some other basis. In addition, the courts would be

forced to devise rules for determining the scope of the

enterprise for which the net income calculation must be

performed. Suppose, for example, that there were connec-

tions of an uncertain nature or degree between drug op-

erations in different cities or countries. Rules would be

needed to determine whether affiliated criminal groups

should be regarded as one enterprise or several. And proof

regarding the connections between such operations would

often be very difficult to obtain. Criminal enterprises do

not have papers of incorporation, partnership agreements,

or (in most instances) other documents establishing pre-

cise business relationships.

Rules would also be needed in order to determine

whether particular illegal expenditures should be consid-

ered as expenses. In the “Pizza Connection” case, the

12 UNITED STATES v. SANTOS

ALITO, J., dissenting

Sicilian Mafia used its income for such things as the mur-

der of magistrates, police officers, witnesses, and rivals.

See, e.g., Casamento, supra, at 1154–1156; United States

v. Gambino, 809 F. Supp. 1061, 1065–1068 (SDNY 1992).

Are these expenditures simply a cost of engaging in the

drug trade? Are they business expenses?

If a net income interpretation were taken to its logical

conclusion, it presumably would be necessary as well to

work out rules for the depreciation of instrumentalities of

crime that must occasionally be replaced due to the efforts

of law enforcement. But it seems quite implausible that

Congress wanted courts or juries in money laundering

cases to grapple with questions such as the useful life of,

say, a drug processing plant or laboratory or the airplanes

and boats that are used to smuggle drugs. And assuming

that the accounting issues can ultimately be resolved by

the courts, there would remain serious problems of proof.

Illegal enterprises generally do not keep books and records

like legitimate businesses do.

It is tempting to dismiss many of the problems noted

above on the ground that “everyone knows” that drug

cartels, organized crime syndicates, and the like make a

profit. But such groups may not operate in the black at all

times, and in any event, if net income is an element of the

money laundering offense, the prosecution must prove net

income beyond a reasonable doubt. The prosecution can-

not simply ask the jury to take notice of the fact that these

groups are profitable.

My point in citing the accounting and proof problems

that would be produced by a net income interpretation is

not that the “ ‘receipts’ ” interpretation is preferable be-

cause “it is easier to prosecute,” ante, at 11 (plurality

opinion), but that creating these obstacles would serve no

discernible purpose. Even if a drug or gambling ring was

temporarily operating in the red during a particular pe-

riod, the laundering of money acquired during that time

Cite as: 553 U. S. ____ (2008) 13

ALITO, J., dissenting

would present the same dangers as the laundering of

money acquired during times of profit. It is therefore

implausible that Congress wanted to throw up such point-

less obstacles.

The plurality opinion attempts to minimize all these

problems by stating that “to establish the proceeds ele-

ment under the ‘profits’ interpretation, the prosecution

needs to show only that a single instance of specified

unlawful activity was profitable and gave rise to the

money involved in a charged transaction.” Ante, at 12.

This suggestion ignores both the language of the money

laundering statute, which makes no reference to an “in-

stance” of unlawful activity, and the realities of money

laundering prosecutions. The prototypical money launder-

ing case is not a case in which a defendant engages in a

single, discrete criminal act and then launders the money

derived from that act—for example, a case in which a

“felon . . . uses . . . stolen money to pay for the rented

getaway car.” Ante, at 8. Rather, the prototypical case

involves numerous criminal acts that occur over a period

of time and the accumulation of funds from all these acts

prior to laundering—for example, the organized crime

syndicate or drug cartel that amasses large sums before

engaging in a laundering transaction.

Take, for example, a case in which a defendant is

charged with doing what was done in the “Pizza Connec-

tion” case—transferring millions of dollars of drug money

overseas, knowing that the funds represent the proceeds of

drug trafficking (“some form of unlawful activity”) and

that the transfer was designed to conceal the origin of the

funds. See 18 U. S. C. §1956(a)(2)(B)(2). In such a case, it

is unrealistic to think that individual dollars can be traced

back to individual drug sales—or that Congress wanted to

require such tracing.

Although the plurality opinion begins by touting the

“single instance” theory as a cure for the accounting and

14 UNITED STATES v. SANTOS

ALITO, J., dissenting

proof problems that a “profits” interpretation produces,

the plurality’s application of the “single instance” theory to

the case at hand shows that this theory will not work. In

this case, the “unlawful activity” that produced the funds

at issue in the substantive money laundering counts was

the operation of the Santos lottery,6 and it is hardly ap-

parent what constitutes a “single instance” of running a

gambling business. Did each lottery drawing represent a

separate “instance”? Each wager? And how long does

each gambling “instance” last? A day? A week? A month?

When the plurality opinion addresses these questions, it

turns out that “a single instance” means all instances that

are charged, i.e., it means that the Government had to

show that receipts exceeded costs during the time the

defendant allegedly conducted, financed, etc., the gam-

bling operation. See ante, at 13, n. 7. Here, since the

Indictment alleged that the Santos lottery continued for

more than 6 years (“[b]egining in or about January 1989

and continuing to in or about December 1994, the exact

dates being unknown to the Grand Jury”),7 the plurality

would apparently compel the Government to prove that

the lottery was profitable over this entire period.

If this is where the “single instance” theory leads, the

theory plainly does not solve the accounting and proof

problems we have noted. And the plurality’s suggestion

that the Government had to show that the gambling op-

eration was profitable for this entire period leads to pre-

posterous results. Suppose that the lottery was profitable

for the first five years and, at the end of each year, re-

spondents laundered funds derived from the business.

Suppose that in the sixth year the business incurred

heavy losses—losses so heavy that they wiped out all of

——————

6 See Indictment in United States v. Alameda, No. 2:96 CR–044 RL

(ND Ind., May 10, 1996), pp. 3, 14–25 (hereinafter Indictment).

7 See id., at 3.

Cite as: 553 U. S. ____ (2008) 15

ALITO, J., dissenting

the profits from the first five years. According to the

plurality, if respondents were found to have operated the

lottery during the entire 6-year period, then the financial

transactions that occurred at the end of years one, two,

three, four, and five would not violate the money launder-

ing statute, even though an accounting done at those

times would have come to the conclusion that the funds

included profits. That result makes no sense.

Whenever a money laundering indictment charges that

the laundered funds derived from an “unlawful activity”

that comprehends numerous acts that occurred over a

considerable period of time—and that is precisely the

situation in many of the types of cases that the money

laundering statute principally targeted—the plurality

opinion’s interpretation will produce difficulties. I have

already discussed drug and gambling cases, and similar

problems will arise in cases in which the unlawful activity

is a form of fraud. For example, the unlawful activity in

mail fraud (18 U. S. C. §1341) is the scheme to defraud,

not the individual mailings carried out in furtherance of

the scheme. See Neder v. United States, 527 U. S. 1, 19

(1999); United States v. Mankarious, 151 F. 3d 694 (CA7

1998). In such a case, what will constitute the “single

instance of unlawful activity”? Will each mailing be a

separate “instance”? The same problem arises with other

fraud predicates, including wire fraud (§1343), see, e.g.,

United States v. Zvi, 168 F. 3d 49 (CA2 1999), and finan-

cial institution fraud (§1344), see, e.g., United States v.

Farr, 69 F. 3d 545 (CA9 1995).

The plurality opinion suggests that the application of a

profits interpretation will be easy in cases in which the

financial transactions are payments of “expenses.” Ante,

at 9. But it may be no small matter to determine whether

particular payments are for “expenses.” When the man-

ager of a gambling operation distributes cash to those who

work in the operation, the manager may be paying them

16 UNITED STATES v. SANTOS

ALITO, J., dissenting

the rough equivalent of a salary; that is, the recipients

may expect to receive a certain amount for their services

whether or not the operation is profitable. On the other

hand, those who work in the operation may have the

expectation of receiving a certain percentage of the gross

revenue (perhaps even in addition to a salary), in which

case their distribution may include profits. Such was the

case in Santos’ lottery, where the runners were paid a

percentage of gross revenue. See Indictment 5; 16 Tr.

1399 (Oct. 9, 1997).

The plurality opinion cites 18 U. S. C. §1963(a) and 21

U. S. C. §853(a), for the proposition that Congress has

“elsewhere” imposed the burden of proving that illegally

obtained funds represent profits, but the plurality opin-

ion’s examples are inapposite. Ante, at 12. Neither of

these provisions, however, requires a determination of net

income. Both provisions permit a fine in the amount of

“not more than twice the gross profits or other proceeds.”

18 U. S. C. §1963(a). Thus, the term “proceeds” as used in

these provisions is not limited to profits.8

For all these reasons, I am convinced that the term

——————

8 In 18 U. S. C. §981(a)(2)(B), which is a forfeiture provision of limited

scope, Congress defines the term “proceeds” to mean net income.

However, that definition applies only “[i]n cases involving lawful goods

or lawful services that are sold or provided in an illegal manner.”

Calculating net income in that situation is easier than it would be in

most money laundering cases, and it is noteworthy that Congress took

care to provide rules and procedures to be used in making the calcula-

tion. See ibid. If Congress had intended to require proof of net income

in money laundering cases, it is likely that Congress likewise would

have specified the rules and procedures to be used. It is noteworthy

that subparagraph (A) of §981(a)(2), which the plurality opinion does

not mention, provides that in cases that are more analogous to the

typical money laundering case, i.e., “cases involving illegal goods [or]

illegal services,” the term “proceeds” “means [any] property of any kind

obtained directly or indirectly, as the result of the commission of the

offense giving rise to forfeiture, and any property traceable thereto, and

is not limited to the net gain or profit realized from the offense.”

Cite as: 553 U. S. ____ (2008) 17

ALITO, J., dissenting

“proceeds” in the money laundering statute means gross

receipts, not net income. And contrary to the approach

taken by JUSTICE STEVENS, I do not see how the meaning

of the term “proceeds” can vary depending on the nature of

the illegal activity that produced the laundered funds.

II

A

It is apparent that a chief reason for interpreting the

term “proceeds” to mean net income in all money launder-

ing cases (the approach taken in the plurality opinion) or

in some money laundering cases (the approach taken by

JUSTICE STEVENS) is the desire to avoid a “merger” prob-

lem in gambling cases—that is, to avoid an interpretation

that would mean that every violation of §1955 (conducting

an illegal gambling business) would also constitute a

violation of the money laundering statute, which carries a

much higher maximum penalty (20 as opposed to 5 years’

imprisonment). This concern is misplaced and provides no

justification for hobbling a statute that applies to more

than 250 predicate offenses and not just running an illegal

gambling business.

First, the so-called merger problem is fundamentally a

sentencing problem, and the proper remedy is a sentenc-

ing remedy. While it is true that the money laundering

statute has a higher maximum sentence than the gam-

bling business statute, neither statute has a mandatory

minimum. Thus, these statutes do not require a judge to

increase a defendant’s sentence simply because the defen-

dant was convicted of money laundering as well as run-

ning a gambling business. When the respondents were

convicted, their money laundering convictions resulted in

higher sentences only because of the money laundering

Sentencing Guideline, United States Sentencing Commis-

sion, Guidelines Manual §2S1.1 (Nov. 1997) (USSG),

18 UNITED STATES v. SANTOS

ALITO, J., dissenting

which, in the pre-Booker 9 era, was mandatory. I agree

with JUSTICE BREYER, ante, at 2–3 (dissenting opinion),

that if a defendant is convicted of money laundering for

doing no more than is required for a violation of 18

U. S. C. §1955, the defendant’s sentence should be no

higher than it would have been if the defendant had vio-

lated only that latter provision. Insofar as the Guidelines

previously required—and now advise in favor of—a stiffer

sentence, the obvious remedy is an amendment of the

money laundering Guideline. And of course, now that the

Guidelines are no longer mandatory, a sentencing judge

could impose the sentence called for by the Guideline that

applies to the gambling business provision, see USSG

§2E3.1(a)(1) (Nov. 2007), or an entirely different sentence.

Second, the merger problem that the plurality opinion

and JUSTICE STEVENS seek to avoid assumes the correct-

ness of the interpretation of the promotion prong of the

money laundering statute that the Seventh Circuit

adopted in Santos’ direct appeal, i.e., that a defendant

“promotes” an illegal gambling business by doing those

things, such as paying employees and winning bettors,

that are needed merely to keep the business running. As

Santos’ brief puts it, the merger problem arises when the

interpretation of “proceeds” as gross receipts is

“[c]ombined with the Government’s broad application of

the ‘promotion’ prong of the money laundering statute.”

Brief for Respondent 6. But the meaning of the element of

promotion is not before us in this case, and it would not

make sense to allow our interpretation of “proceeds” to be

dictated by an unreviewed interpretation of another statu-

tory element.

Third, even if there is a merger problem, it occurs in

only a subset of money laundering cases. The money

laundering statute reaches financial transactions that are

——————

9 United States v. Booker, 543 U. S. 220 (2005).

Cite as: 553 U. S. ____ (2008) 19

ALITO, J., dissenting

intended to promote more than 250 other crimes, ante, at

9 (plurality opinion), as well as transactions that are

intended to conceal or disguise the nature, location,

source, ownership, or control of illegally obtained funds.

See 18 U. S. C. §1956(a). The meaning of the term “pro-

ceeds” cannot vary from one money laundering case to the

next, and the plurality opinion and JUSTICE STEVENS

inappropriately allow the interpretation of that term to be

controlled by a problem that may arise in only a subset of

cases.

B

The plurality opinion defends its interpretation by

invoking the rule of lenity, but the rule of lenity does not

require us to put aside the usual tools of statutory inter-

pretation or to adopt the narrowest possible dictionary

definition of the terms in a criminal statute. On the con-

trary, “[b]ecause the meaning of language is inherently

contextual, we have declined to deem a statute ‘ambigu-

ous’ for purposes of lenity merely because it was possible

to articulate a construction more narrow than that urged

by the Government.” Moskal v. United States, 498 U. S.

103, 108 (1990) (citing McElroy v. United States, 455 U. S.

642, 657–658 (1982)). As I have explained above, the

meaning of “proceeds” in the money laundering statute

emerges with reasonable clarity when the term is viewed

in context, making the rule of lenity inapplicable.

* * *

For these reasons, I would reverse the decision of the

Court of Appeals, and I therefore respectfully dissent.