Thursday, October 22, 2009

U.S. v. Van Alstyne, No. 07-50105 (10-22-09). The 9th struggled to make precedential sense out of U.S. v. Santos, 128 S.Ct. 2020 (2008), which dealt with the meaning of the money laundering statute. The 9th (Berzon joined by Hawkins and Clifton) sought to the holding from the cobbling together of the plurality and Stevens concurrence. Santos asked whether, under 18 USC 1956 (money laundering) "proceeds" meant profits or "gross receipts." The plurality held that the term "profits" referred to the profits of the illegal gambling operations, and not to the payments made to the runners and collectors and winners. The plurality would apply this definition of profits across the board. The dissenters would apply "proceeds" to the total amount taken in. The Stevens concurrence said it depended upon the enterprise, in that the proceeds meant profits in Santos because of the need to fuel the operation, but may not in a sale of contraband. The confusion as to what constitutes proceeds continues in the circuits. The 9th here faced a Ponzi scheme, where the defendant defrauded investors of $10 million plus. The 9th parsed Santos, and held that money laundering did not apply to the counts involving disbursements back to the investors, because some payments had to be made to keep the scheme going. Essentially, the disbursements were akin to winnings in the illegal lottery that were needed to draw in other investors. The 9th affirmed the one count where the disbursement was the total return of an invested amount to a defendant because that return was not needed to keep the scheme going, or draw in others, but constituted proceeds used help cover up the scheme from detection. (Congress subsequently amended the statute to have "proceeds" mean the "gross receipts.") The 9th's approach in the meantime concludes that Santos's holding that commanded five votes is one where "proceeds" means "profits" where viewing "proceeds" as "receipts" would present a "merger" problem (the illegal scheme is one and the same as the proceeds from laundering). In sentencing, the 9th vacated and remanded, correcting errors, and to apply Guideline amendments that clarify the calculation of loss. Finally, given the indigency of the defendant, "nominal" restitution payments of $10,000/month was too high.

Congratulations to AFPD Jim Locklin of the FPD Office of the C.D. Ca (Los Angeles).


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