U.S. v. Scialabba, No. 01-1291.
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
| Writing for the Court | Easterbrook |
| Citation | 282 F.3d 475 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Lawrence SCIALABBA and Robert T. Cechini, Defendants-Appellants. |
| Decision Date | 28 February 2002 |
| Docket Number | No. 01-1292.,No. 01-1291. |
Page 475
v.
Lawrence SCIALABBA and Robert T. Cechini, Defendants-Appellants.
Stephen D. Anderson (argued), Office of the U.S. Atty., Chicago, IL, for Plaintiff-Appellee.
Marc W. Martin, Chicago, IL, Alexander M. Salerno (argued), Berwyn, IL, for Defendants-Appellants.
Before FLAUM, Chief Judge, and COFFEY and EASTERBROOK, Circuit Judges.
EASTERBROOK, Circuit Judge.
A financial transaction involving the "proceeds" of crime, and designed to promote the carrying on of certain offenses, is unlawful money laundering. 18 U.S.C. § 1956(a)(1). Neither the Supreme Court nor this circuit has defined the word "proceeds", and there is no definition in the statute itself. This case presents the question whether "proceeds" refers to the gross income from an offense, or only the net income. We conclude that, at least when the crime entails voluntary, business-like operations, "proceeds" must be net income; otherwise the predicate crime merges into money laundering (for no business can be carried on without expenses) and the word "proceeds" loses operational significance.
The business in this case is gambling, which is unlawful in Illinois unless licensed by the state. OK Amusement, of which Robert Cechini was sole proprietor, provided video poker machines to bars, taverns, and restaurants (collectively, the retail outlets). Patrons dropped coins into the machines and received on-screen "credits" if they won. These credits could be used lawfully to continue playing, or
Page 476
unlawfully as the basis of cash payouts. Many retail outlets redeemed credits for cash. Later, when Cechini or Lawrence Scialabba, his assistant, opened the coin boxes, the contents would be split with the outlet's owner: some went to cover the payments made to customers, some was retained by the owner as compensation for his role in the business, and defendants kept the rest as compensation for the machines — which OK Amusement not only supplied but also fixed (if they broke down) or replaced (if they were seized in raids by the police).
Cechini and Scialabba have been convicted of running an unlawful gambling business, see 18 U.S.C. §§ 371, 1955; filing tax returns that failed to report their income from this business, see 26 U.S.C. § 7206(1); and conspiring to defeat tax collection from the outlets' owners, see 18 U.S.C. § 371. They do not appeal from any of these convictions. But they do appeal from the money laundering convictions, because under the version of the Sentencing Guidelines in force before November 1, 2001, the money laundering convictions substantially augmented their prison terms. Compare United States v. Buckowich, 243 F.3d 1081 (7th Cir.2001), with Amendment 634, effective November 1, 2001. See also United States v. Perez, 249 F.3d 583 (7th Cir.2001). Scialabba's base offense under the old version of U.S.S.G. § 2S1.1 was 31, producing a sentencing range of 108-135 months (and a sentence of 108 months); with no money laundering counts the offense level would have been 21 and the range 37-46 months. Cechini's base offense level was 34, with a range of 235-293 months; he received a sentence of 188 months (the bottom of the range for level 32, after the district court made an error in addition); but without the money laundering convictions his offense level would have been 23 and the sentencing range 84-105 months.
According to the prosecutor, Cechini and Scialabba violated § 1956(a)(1) when they handed some of the money in the coin boxes over to the outlets' owners and used more of that revenue to meet the expenses of the business (such as leasing the video poker machines and obtaining amusement licenses for them from the state). This is equivalent to saying that every drug dealer commits money laundering by using the receipts from sales to purchase more stock in trade, that a bank robber commits money laundering by using part...
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United States v. Santos, No. 06–1005.
...one, a challenge to their money-laundering convictions based on the Seventh Circuit's subsequent decision in United States v. Scialabba, 282 F.3d 475 (2002), which held that the federal money-laundering statute's prohibition of transactions involving criminal “proceeds” applies only to tran......
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U.S. v. Aslan, Nos. 08–1486
...(2008) (hereafter “ Santos II ”), which was issued after Fechete's trial and conviction, and on our opinion in United States v. Scialabba, 282 F.3d 475 (7th Cir.2002). Both opinions addressed the meaning of the term “proceeds” in the money laundering statute. Under Fechete's reading of thes......
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People v. Gutman, No. 110338.
...should be defined in the federal money laundering statute (18 U.S.C. § 1956(a)(1) (2006)). In [959 N.E.2d 626] United States v. Scialabba, 282 F.3d 475, 476–78 (7th Cir.2002), [355 Ill.Dec. 212] the Seventh Circuit held that “ proceeds” in the federal money laundering statute should be defi......
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Prost v. Anderson, No. 08–1455.
...Prost's § 2255 petition was pending, the Seventh Circuit adopted the “profits” definition of “proceeds,” see United States v. Scialabba, 282 F.3d 475, 478 (7th Cir.2002), yet Mr. Prost never sought to amend his motion to add a claim based on that statutory argument. And it was not until 200......
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United States v. Santos, No. 06–1005.
...one, a challenge to their money-laundering convictions based on the Seventh Circuit's subsequent decision in United States v. Scialabba, 282 F.3d 475 (2002), which held that the federal money-laundering statute's prohibition of transactions involving criminal “proceeds” applies only to tran......
-
U.S. v. Aslan, Nos. 08–1486
...(2008) (hereafter “ Santos II ”), which was issued after Fechete's trial and conviction, and on our opinion in United States v. Scialabba, 282 F.3d 475 (7th Cir.2002). Both opinions addressed the meaning of the term “proceeds” in the money laundering statute. Under Fechete's reading of thes......
-
People v. Gutman, No. 110338.
...should be defined in the federal money laundering statute (18 U.S.C. § 1956(a)(1) (2006)). In [959 N.E.2d 626] United States v. Scialabba, 282 F.3d 475, 476–78 (7th Cir.2002), [355 Ill.Dec. 212] the Seventh Circuit held that “ proceeds” in the federal money laundering statute should be defi......
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Prost v. Anderson, No. 08–1455.
...Prost's § 2255 petition was pending, the Seventh Circuit adopted the “profits” definition of “proceeds,” see United States v. Scialabba, 282 F.3d 475, 478 (7th Cir.2002), yet Mr. Prost never sought to amend his motion to add a claim based on that statutory argument. And it was not until 200......
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MONEY LAUNDERING
...wire transfers involved proceeds of first set, and, therefore, constituted money laundering). 64. Compare United States v. Scialabba, 282 F.3d 475, 475 (7th Cir. 2002) (holding that “proceeds” means net income), with Santos, 461 F.3d at 890–92 (noting that the First, Third, and Eighth Circ......