Before 1987, the “value” of a crime in federal court was a matter of argument between counsel.  The government would try to stuff in every penny it could find, while the defense would minimize the damage.  It was but one of the points raised at a sentence, and not nearly as significant as the nature of the defendant’s conduct, the “maliciousness” of his act.

With the acceptance of the federal sentencing guidelines, the entire world turned around.  Suddenly, numbers meant everything.  Whether drugs or financial crime, the severity of the sentence was based on a number attributed to the crime by the government, which tied the judge’s hands as to sentencing range.  What was meant by those numbers quickly became clear:  The numbers bore little connection to any rational view of the crime, but rather to some fictional construct that served to make sure that a $10 theft looked like a million dollars.  The defendant was sentenced accordingly.

Twenty years later, with the heat turned down to a mere simmer, the Supreme Court is finally fleshing out some of the harshest, most bizarre applications.  In an odd 4-1-4 decision, the Supremes decided   United States v. Santos, which held (kinda) that proceeds, at least in the context of gambling crimes, to mean “profit”.  In this case, the crime itself involved the laundering of “proceeds”, and the issue arose in the context of a numbers runner delivering winnings.

While the lawprofs and Supreme Court watchers are fascinated with the breakdown of the vote, noting that Justices Scalia, Thomas, Souter and Ginsburg make up the bulk of the majority, with Justice Stevens providing the tie breaker, this is of less concern for me since I dwell in the trenches.

My hope is that this will bring reason back to the loss calculations of the sentencing guidelines.

Consider the implications: Santos involved “numbers” (called a “lottery” by the Supremes and gambling by others).  The  idea is that they take in money from people betting on the number, and pay out money on people who hit the number.  The amount of money between what’s taken in and what’s paid out is the profit.  To use hypothetical amounts, let’s say a numbers guy gets $100,000 worth of bets.  Mind you, the bettors don’t pay the money until later, so they are just placed.  One guy hits the number, and wins $50,000.  He gets paid and the numbers guy collects from the losers, so he grosses a profit of $50,000.  He has to pay his runners, rent, collection people, 3M Corp., BIC pens, Verizon, etc.  Net profit ends up being $25,000, and that would be the amount used to calculate the guidelines.

So, under the government’s view, proceeds included all revenues, meaning the $100,000.  Under Santos, proceeds is now interpreted per the rule of lenity, to mean profits, revenues less the cost of doing business.  Moreover, the movement of funds that are not “profits” will no longer be criminal proceeds, and therefore not constitute money laundering or other related crimes.  This is a significant change in itself, with ramifications for a variety of crimes.

The difference between the gang of four and Justice Stevens is in the latter’s opinion that while this interpretation can apply to gambling, it is not unreasonable to believe that Congress meant a different interpretation to exist with regard to narcotics and organized crime.  Justice Scalia, writing for his group, contends that proceeds should be interpreted consistently throughout, and that you can’t pick and choose interpretations based on the particular crime involved. 

In federal cases, the amounts of money involved in crimes are viewed as astronomical, divorced from any actual “gain” from the commission of a crime.  A crime that actually nets a defendant $10,000 will be attributed a value of $100,000, for example, because “proceeds” has included any amount of money allegedly involved, no matter how it was involved, and that sum was never reduced by the costs of committing a crime.

For those who would argue (and understandably so) that criminals shouldn’t benefit from their own cost of doing business, this misses the point of attributing a value to a crime.  It’s not about coddling criminals or diminishing the significance of their crime.  It’s about trying to squeeze crime into a loss table and figuring out what the actual numbers should be.  A person who gains $10,000 from crime should not be sentenced as if his gain was $100,000 or a million.  Small-time criminals should not be converted to kingpins because the government likes to play with the numbers. 

While my application of Santos, which is not a guidelines decision, may have to await another decision of the Supremes before circuits and district courts decide that Justice Scalia’s view, that consistency of interpretation across the board is required, should prevail, this decision should hopefully bring a little sanity back to the sentencing guidelines calculations.   Of course, there’s nothing to stop the Sentencing Guidelines Commission, should it so desire, from undoing the impact of this decision by revising the tables to increase the guidelines to make a $1 profit a level 34.  But at least it’s a step in the right direction.