Denver Bar Association
September 2008
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Crime Must Pay

by Paul Kennebeck

When laundering is a wash

Crime does not pay. In fact, a close reading of a recent U.S. Supreme Court case underscores the premise that if the crime doesn’t pay, then it is not a crime. Maybe this righteous decision is a sign that the very elite justices who make up our highest court still recognize the travails of the little man.

Take Efrain Santos, for example. Efrain Santos is a criminal. Or at least was guilty of the crime of money-laundering for a while — after his trial and after the Court of Appeals reviewed his conviction.

Santos was charged, among other things, with money laundering. Santos operated an illegal lottery, apparently without the benefit of a very well-thought out business plan. He 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 as their commission, and delivered the rest of the money to Santos’s collectors. The collectors then delivered the money to Santos, who used some of it to pay the salaries of the collectors and to pay off the winners of the lottery.
Can you see the problem here? Santos is obviously an enterprising man with a grand entrepreneurial spirit — why should governments or casinos be the only entities to run a lottery? Santos was clever enough to recognize that his overhead was low and his taxes were minimal, however, contrary to the advice of the best business consultants, he had front-loaded his business operation with too much expense. The result was that apparently, at the time of his arrest, all that was left of his income was enough money to meet expenses. No different than a law firm experiencing a bad month.

Can a guy at the low end of the economic scale, a guy who doesn’t possess the business skills to be a successful criminal, a guy who can’t turn a profit — can he be guilty of money-laundering?

No way.

This is the land of capitalism, where profit is all.

Justice Antonin Scalia stated, “The money-laundering charges brought against Santos were based on his payments to the lottery winners and his employees…Neither type of transaction can fairly be characterized as involving the lottery’s profits.”

In other words, “The District Court found no evidence that the transactions on which the money-laundering convictions were based … involved profits, as opposed to receipts, of the illegal lottery, and accordingly vacated the money-laundering convictions.”

Santos didn’t have any profits.

Remember that. You have to money-launder profits before you can be convicted of money-laundering. And before you can money-launder profits, you have to earn a profit. Which is only fair.

This opinion, interpreting a federal statute prohibiting money-laundering, subtly recognizes the core values that made America great. If you can’t turn a profit, you’re not even worthy of being called a criminal.

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