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Saturday, November 25, 2006

Ind. Decisions - East Chicago case could resolve dispute in the federal courts re definition of money laundering

Joe Carlson of the NWI Times reports:

Government lawyers are hoping to use the case against East Chicago's "Puerto Rican Frankie" to resolve a dispute in the federal courts regarding the precise definition of money laundering.

In Indiana, Chicago and the rest of the 7th U.S. Circuit, it is not considered money laundering to pay for the operation of a criminal enterprise with the profits from that illegal business.

But In New Jersey and the 3rd U.S. Circuit, that is considered money laundering by federal law.

Because of the discrepancy, lawyers from the U.S. Solicitor General's Office in Washington, D.C., have decided to attempt to take the case of East Chicago's old tavern lottery before the U.S. Supreme Court. * * *

In 1998, Efrain "Puerto Rican Frankie" Santos was sentenced to 17 years in prison for running the illegal lottery known as "bolita" in bars and restaurants in East Chicago and throughout the region since the 1970s.

But Santos, 69, was released from prison in 2004 after U.S. District Judge James Moody ruled that Santos' actions were no longer considered money laundering based on a 7th Circuit ruling in the case in 2002.

It is still illegal to run an unsanctioned lottery, and Santos served his five-year prison sentence for that.

But Moody found that the government's case on the much harsher charges of money laundering had evaporated because of how the 7th Circuit justices interpreted the definition of "net proceeds" and "gross proceeds" in federal laws.

Prosecutors objected to Moody's decision, saying the 7th Circuit was the only one in the land in which judges believed that investing the profits of a criminal enterprise back into the illicit business was not money laundering. In New Jersey, Massachusetts and Minnesota, that was still considered money laundering.

Earlier this year, appellate justices in Chicago declined to overturn Moody's decision, which turned on whether the word "proceeds" in Congress' money laundering definition meant net or gross profits.

"Rather than vacillate over Congress' intent, it is better for our circuit here, having already considered and duly decided the issue, to stay the course at this juncture, for only Congress or the Supreme Court can definitively resolve the debate over this ambiguous term," the 7th Circuit Court's decision in Santos' case said.

The ruling freed Santos from jail.

Santos has said he's confident that even if the Supreme Court overturns that ruling, he could make a compelling argument that his age and status in the community should keep him out of jail.

Here is the ILB entry on the Aug. 25th 7th Circuit opinion in Santos, Efrain v. USA.

Posted by Marcia Oddi on November 25, 2006 11:17 AM
Posted to Ind. (7th Cir.) Decisions