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."
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 portion of the bets (between 15% and 25%) as their commissions, and delivered the rest to Santos's collectors. Collectors, one of whom was respondent Diaz, then delivered the money to Santos, who used some of it to pay the salaries of
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 Indiana, naming Santos, Diaz, and 11 others. A jury found Santos guilty of one count of conspiracy to run an illegal gambling business (18 U.S.C. § 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 (C.A.7 2000). We declined to review the case. 531 U.S. 1021, 121 S.Ct. 587, 148 L.Ed.2d 503 (2000).
Thereafter, respondents filed motions under 28 U.S.C. § 2255, collaterally attacking their convictions and sentences. 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 prohibition of transactions involving criminal "proceeds" applies only to transactions involving criminal profits, not criminal receipts. Id., at 478. Applying that holding to respondents' 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 (C.A.7 2006). We granted certiorari. 550 U.S. 902, 127 S.Ct. 2098, 167 L.Ed.2d 812 (2007).
The federal money-laundering statute prohibits a number of activities involving criminal "proceeds." Most relevant to this case is 18 U.S.C. § 1956(a)(1)(A)(i), which criminalizes transactions to promote criminal activity.
"Proceeds," moreover, has not acquired a common meaning 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 provisions, 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, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988). The word appears repeatedly throughout the statute, but all of those appearances leave the ambiguity intact. Section 1956(a)(1) itself, for instance, makes sense under either definition: One can engage in a financial 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,
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, 37 S.Ct. 407, 61 S.Ct. 857 (1917); McBoyle v. United States, 283 U.S. 25, 27, 51 S.Ct. 340, 75 S.Ct. 816 (1931); United States v. Bass, 404 U.S. 336, 347-349, 92 S.Ct. 515, 30 L.Ed.2d 488 (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.
Stopping short of calling the "profits" interpretation absurd, the Government contends that the interpretation should nonetheless be rejected because it fails to give the federal money-laundering statute its proper scope and because it hinders effective enforcement of the law. Neither contention overcomes the rule of lenity.
According to the Government, if we do not read "proceeds" to mean "receipts," we
When interpreting a criminal statute, we do not play the part of a mindreader. 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. Wiltberger, 5 Wheat. 76, 105, 5 S.Ct. 37 (1820). And Justice Frankfurter, writing for the Court in another case, said the following: "When Congress leaves to the Judiciary the task of imputing to Congress an undeclared will, the ambiguity should be resolved in favor of lenity." Bell v. United States, 349 U.S. 81, 83, 75 S.Ct. 620, 99 S.Ct. 905 (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 "proceeds" 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 criminal activity into the next poses a greater threat to society than the mere payment of crimerelated expenses 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 confront 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 defendant 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. Congress 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 predictably 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 associated 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 his confederates their
The Government suggests no explanation for why Congress 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 "proceeds" 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 profits consist of what remains after expenses are paid. Defraying an activity's costs with its receipts simply will not be covered.
The principal dissent suggests that a solution to the merger problem may be found in giving a narrow interpretation 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 business running," post, at 2044, because promotion (presumably) means doing things that will cause a business to grow. See Webster's 2d, at 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 2034-2035.) 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) (2000 ed.) (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, at 1981. Surely one promotes "the carrying on" of a gambling enterprise by merely ensuring that it continues in business.
Justice BREYER admits that the merger problem casts doubt on the Government's position, post, at 2034, but believes there are "other, more legally felicitous" solutions to the problem, post, at 2035. He suggests that the merger problem could be solved by holding that "the money laundering 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 Commission might revise its recommended sentences for money laundering. Ibid. See also principal dissent, post, at 2044-2045 (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 2026, the merger problem affects more than just sentencing; it affects charging decisions and plea-bargaining as well.
The Government also argues for the "receipts" interpretation because—quite frankly—it is easier to prosecute. Proving the proceeds and knowledge elements of the federal money-laundering offense under the "profits" interpretation will unquestionably require proof that is more difficult to obtain. Essentially, the Government asks us to resolve the statutory ambiguity in light of Congress's presumptive intent to facilitate money-laundering prosecutions. 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 disposition 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).
In any event, the Government exaggerates the difficulties. 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. Contrary to the principal dissent's view, post, at 2038, 2040-2041, 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.
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 typically 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, 119 S.Ct. 1707, 143 L.Ed.2d 985 (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 underlying 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 professional 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.
Concurring in the judgment, Justice STEVENS expresses the view that the rule of lenity applies to this case because there is no legislative history reflecting any legislator's belief about how the money-laundering statute should apply to lottery operators. See post, at 2032, 2033. The rule of lenity might not apply, he thinks, in a case involving an organized crime syndicate or the sale of contraband because the legislative history supposedly contains some views on the meaning of "proceeds" in those circumstances.
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 2032, 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, 125 S.Ct. 716, 160 L.Ed.2d 734 (2005), held that the meaning of words in a statute cannot change with the statute's application. See id., at 378, 125 S.Ct. 716. To hold otherwise "would render every statute a chameleon," id., at 382, 125 S.Ct. 716, and "would establish within our jurisprudence. . . the dangerous principle that judges can give the same statutory text different meanings in different cases," id., at 386, 125 S.Ct. 716. 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, 125 S.Ct. 716 (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 that triggered the rule of lenity. See United States v. Thompson/Center Arms Co., 504 U.S. 505, 517-518, and n. 10, 112 S.Ct. 2102, 119 L.Ed.2d 308 (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 2031, statutory ambiguity "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
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, 97 S.Ct. 990, 51 L.Ed.2d 260 (1977). But the narrowness of his ground consists 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 particular 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 2036, 2044.
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 characterized 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.
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, 107 S.Ct. 2729, 97 L.Ed.2d 74 (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 implicitly authorized to fill"). Congress has included definitions of the term "proceeds" in some criminal statutes,
Although it did not do so, it seems clear that Congress could have provided that the term "proceeds" shall have one meaning when referring to some specified unlawful activities and a different meaning when referring to others. In fact, in the general civil forfeiture statute, § 981, Congress did provide two different definitions of "proceeds," recognizing that—for a subset of activities—"proceeds" must allow for the deduction of costs. Compare § 981(a)(2)(A) (2000 ed.) (defining "proceeds"
We have previously recognized that the same word can have different meanings in the same statute.
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 contraband and the operation of organized crime syndicates involving such sales.
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 gambling 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.
Constrained by a holding that the payment of expenses constitutes "promotion,"
Justice ALITO and Justice BREYER suggest that the advisory nature of the Guidelines post-Booker, United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), or the possibility of an amendment to the money laundering Guideline, would soften this blow, post, at 2044-2045 (opinion of ALITO, J.); post, at 2034-2035 (dissenting opinion of BREYER, J.), and indeed they could. But 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 business 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 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." Ante, at 2027. 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 business 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
Justice BREYER, dissenting.
I join Justice ALITO's dissent while adding the following observations about what has been referred to as the "`merger problem.'" Ante, at 2026 (plurality opinion). Like the plurality, I doubt that Congress intended the money laundering statute automatically to cover financial transactions 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 penalty (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 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 Justice that "money laundering cannot properly be charged for `merged' transactions that are part of the underlying crime." Report to Congress: Sentencing Policy for Money Laundering Offenses, including Comments on 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 describes. See post, at 2038-2041 (dissenting opinion) (describing difficulties associated with proof and accounting). For another thing,
Finally, if the "merger" problem is essentially a problem of fairness in sentencing, the Sentencing Commission has adequate authority to address it. Congress has instructed the Commission to "avoi[d] unwarranted sentencing disparities" 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 laundering Guideline, United States Sentencing Commission, Guidelines Manual § 2S1.1 (Nov. 2007), 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 offense level of the underlying crime, see id., Supp. to App. C, Amdt. 634 (Nov.2001), suggest a willingness to consider directly this kind of disparity. Such an approach could solve the "merger" problem without resort to creating 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.
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 dictionary definition. Webster's Third New International Dictionary 1807 (1976) (hereinafter Webster's 3d). See also Random House Dictionary of the English Language 1542 (2d ed.1987) ("the total amount 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 problems 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.
Fortunately, Justice STEVENS' 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 2023-2024 (opinion concurring in judgment).
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 context 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 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,
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 receipts. 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 (2006 Supp.); 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), 750.411k (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 Ann. §§ 34.01(4), 34.02 (West Supp.2007); Utah Code Ann. §§ 76-10-1902(9), 76-10-1903 (Lexis 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).
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.
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 traffickers and other criminals who amass large quantities of cash from using these funds "to support a luxurious lifestyle" or otherwise to enjoy the fruits of their crimes. Model Act, Policy Statement, at 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, & Hannan, Money Laundering, 31 Am.Crim. L.Rev. 721, 722 (1994); H.R.Rep. No. 99-746, p. 16 (1986) (hereinafter 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 Ann. §§ 34.02(a)(3)-(4).
Both of these objectives are frustrated if a money laundering 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 shipment 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 transactions 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 laundering statute to apply to these financial transactions. If the cartel leaders use the money to live in luxury, this provides 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.
It is certainly true that Congress, in enacting the federal money laundering statute, was primarily concerned about criminal enterprises that realize profits. A criminal operation 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 problems 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.
The implausibility of a net income interpretation is highlighted in cases involving professionals and others who are hired to launder money. Those who are knowledgeable 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; Financial
A net income interpretation would risk hamstringing such prosecutions. To violate 18 U.S.C. § 1956(a)(1), a defendant must "kno[w] that 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 enterprise is operating in the black when the funds in question were acquired. Therefore, under a net income interpretation, 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 explicitly 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 derived 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 providing the funds or knew that the entity or person had been involved in the illegal enterprise for a lengthy period. See ante, at 2029-2030. But what about the case where the launderer accepts a million dollars of drug money on a single occasion? And even if there would be legally sufficient evidence 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.
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 problems that Congress cannot have wanted. These problems may be especially acute in the very cases that money laundering statutes principally target, that is, cases involving 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 Commission 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) (hereinafter S. Rep.)
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 laundered 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 (C.A.2 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 quotation marks omitted)); Hearing on Money Laundering Legislation before the Senate Committee on the Judiciary, 99th Cong., 1st Sess., 1 (1985) (statement of Chairman Thurmond), 29 (statement of Sen. Biden), 30 (statement 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 Congress 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 opinion's interpretation of the term "proceeds," however, would often produce such problems. Tracing funds back to particular drug sales and proving that these sales were profitable will often prove impossible. See United States v. Bajakajian, 524 U.S. 321, 351-352, 118 S.Ct. 2028, 141 L.Ed.2d 314 (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 accounting rules would have to be developed.
Rules would also be needed in order to determine whether particular illegal expenditures should be considered as expenses. In the "Pizza Connection" case, the Sicilian Mafia used its income for such things as the murder 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 (S.D.N.Y.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 cannot 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 because "it is easier to prosecute," ante, at 2028 (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 period, the laundering of money acquired during that time 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 pointless obstacles.
The plurality opinion attempts to minimize all these problems by stating that "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." Ante, at 2029. This suggestion ignores both the language of the money laundering statute, which makes no reference to an "instance" of unlawful activity, and the realities of money
Take, for example, a case in which a defendant is charged with doing what was done in the "Pizza Connection" 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). 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 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,
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 gambling operation. See ante, at 2029, n. 7. Here, since the Indictment alleged that the Santos lottery continued for more than 6 years ("[b]eginning in or about January 1989 and continuing to in or about December 1994, the exact dates being unknown to the Grand Jury"),
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 operation was profitable for this entire period leads to preposterous results. Suppose that the lottery was profitable for the first five years and, at the end of each year, respondents 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 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 laundering statute, even though an accounting done at those times would have come to the conclusion that the funds included
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, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999); United States v. Mankarious, 151 F.3d 694 (C.A.7 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 (C.A.2 1999), and financial institution fraud (§ 1344), see, e.g., United States v. Farr, 69 F.3d 545, 1995 WL 638249 (C.A.9 1995) (unpublished).
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 2027. But it may be no small matter to determine whether particular payments are for "expenses." When the manager of a gambling operation distributes cash to those who work in the operation, the manager may be paying them 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 opinion's examples are inapposite. Ante, at 2028-2029. 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.
It is apparent that a chief reason for interpreting the term "proceeds" to mean net income in all money laundering 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" problem 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 sentencing remedy. While it is true that the money laundering statute has a higher maximum sentence than the gambling 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 defendant was convicted of money laundering as well as running 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 Commission, Guidelines Manual § 2S1.1 (Nov.1997) (USSG), which, in the pre-Booker
Second, the merger problem that the plurality opinion and Justice STEVENS seek to avoid assumes the correctness 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 Santos 6. But the meaning of the element of promotion is not before us in this case,
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 intended to promote more than 250 other crimes, ante, at 2027 (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 "proceeds" 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.
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 interpretation or to adopt the narrowest possible dictionary definition of the terms in a criminal statute. On the contrary, "[b]ecause the meaning of language is inherently contextual, we have declined to deem a statute `ambiguous' 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, 111 S.Ct. 461, 112 L.Ed.2d 449 (1990) (citing McElroy v. United States, 455 U.S. 642, 657-658, 102 S.Ct. 1332, 71 L.Ed.2d 522 (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.
Respondents were also convicted of conspiring to launder money under § 1956(h). Because the Government has not argued that respondents' conspiracy convictions could stand if "proceeds" meant "profits," see 461 F.3d 886, 889 (CA7 2006), we do not address that possibility.
The only state money laundering statute that 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).
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.