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High court limits laundering cases

In two suits, justices ruled that prosecutors have been stretching the bounds of the law.

WASHINGTON - The Supreme Court yesterday made it tougher for prosecutors to prove money-laundering charges, ruling twice against the government's use of what it says is a critical weapon in fighting drug lords and other criminals.

The justices were unanimous in one case, Cuellar v. U.S., that merely proving a person hid drug money while transporting it was not enough to satisfy a 1986 law's standard that the transportation be intended to disguise the "nature, location, the source, the ownership or the control" of the funds.

The court splintered, 5-4, in the other case, U.S. v. Santos, interpreting the law to refer only to the profits garnered from an illegal enterprise, rather than to gross receipts. The government said that would make indictment far more difficult to prove.

Justice Samuel A. Alito Jr., a former prosecutor, led dissenters in the 5-4 ruling, saying the opinion "would frustrate Congress' intent and maim a statute that was enacted as an important defense against organized criminal enterprises."

Justice Antonin Scalia, writing for himself and three others, said that the money-laundering statute referred to criminal "proceeds" but that Congress had not defined the word further to mean "receipts" or "profits."

"Under a long line of our decisions, the tie must go to the defendant," Scalia wrote, saying the "rule of lenity" requires the court to interpret the law in the light most favorable to those subject to it.

Justice John Paul Stevens broke what was in essence a 4-4 tie, saying that in this instance he thought "proceeds" referred to "profits." But he frustrated Scalia by saying that might not always be the case, especially in the prosecution of organized-crime syndicates, on which he said Congress had been clearer.

In the case, Efrain Santos and Benedicto Diaz ran an illegal lottery in Indiana. They were convicted of several offenses, but a federal appeals court threw out the money-laundering charge. It said that transactions such as paying off winners and helpers in the enterprise did not qualify as criminal profits and thus could not be the basis for money-laundering charges.

Without such an interpretation, Scalia wrote, "nearly every violation of the illegal-lottery statute would also be a violation of the money-laundering statute."

In the case decided unanimously, Humberto Fidel Regalado Cuellar was stopped in 2004 while driving erratically in Texas, headed for Mexico. He aroused more suspicion when, after telling officers they could search his car, he began "making the sign of the cross," according to the opinion written by Justice Clarence Thomas.

Officers found $81,000 that they said smelled like marijuana under the floorboard. Cuellar was found guilty of violating the money-laundering law.

Thomas disagreed with Cuellar's argument that the law required proof that the defendant tried to create the appearance that the money was legitimate. But it does require more than simply proving the money was concealed, the court found.

Congress enacted the money-laundering law after a presidential panel highlighted the problem of "washing" criminal proceeds through overseas banks and legitimate businesses. The law carries 20-year maximum prison terms and heavy fines.

Read the justices' opinions in the Santos case via and the Cuellar case via