United States v. Santos

Santos was convicted on federal money laundering charges for running an illegal lottery. When convicted, the district court interpreted the word “proceeds” in the money laundering statute to mean "gross income of unlawful activity." The district court later vacated the money laundering conviction on the basis of an appellate court decision that defined “proceeds” to mean net income, as opposed to gross income. On appeal, the Seventh Circuit Court of Appeals declined to change their definition of the word "proceeds" from net income to gross income.

Question Presented:

The principal federal money laundering statute, 18 U.S.C. 1956(a)(1), makes it a crime to engage in a financial transaction using the “proceeds” of certain specified unlawful activities with the intent to promote those activities or to conceal the proceeds. The question presented is whether “proceeds” means the gross receipts from the unlawful activities or only the profits, i.e., gross receipts less expenses.

Decision under Review

Supreme Court Opinion