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02 Jun '08

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Justices Rule for Defendants In Money-Laundering, Internet Credit Card Cases
by R.A. Hettinga 02 Jun '08

02 Jun '08

<http://online.wsj.com/article_print/SB121241156893137637.html> June 2, 2008 11:38 a.m. EDT The Wall Street Journal Justices Rule for Defendants In Money-Laundering Cases A WALL STREET JOURNAL ONLINE NEWS ROUNDUP June 2, 2008 11:38 a.m. The Supreme Court on Monday ruled against the government in two money- laundering cases, making it more difficult for prosecutors to use an important weapon in the war on drugs and organized crime. In a unanimous decision, Justice Clarence Thomas said that a money laundering case cannot be proven merely by showing that funds were concealed while being transported. In a separate 5-4 decision, the court said that money laundering refers to profits of an illegal operation, not gross receipts. The court's interpretation is a narrow one opposed by law enforcement agencies. Justice Antonin Scalia said the narrow definition will not unduly burden authorities, who must show only that a single instance of unlawful activity was profitable. Providing the crucial tie-breaking vote, Justice John Paul Stevens refused to go as far as Justice Scalia, saying Congress favored a broader interpretation of the law in cases involving the operation of organized crime syndicates. In the cases of Efrain Santos and Benedicto Diaz, a federal judge and the 7th U.S. Circuit Court of Appeals in Chicago said that paying off gambling winners and compensating employees who collect the bets don't qualify as money laundering. Those are expenses, and prosecutors must show that profits were used to promote the illegal activity, the appeals court ruled in a decision affirmed by the Supreme Court. In dissent, Justice Samuel Alito said that the court's ruling would frustrate congressional intent and "maim" a law that was enacted as an important defense against organized criminal enterprises. The other case did not go as far in favor of defendants as defense lawyers had hoped. In his unanimous ruling, Justice Thomas said that the government isn't required to prove that a defendant attempted to create the appearance that laundered money was legitimate. But the court said that prosecutors must show that the purpose of transporting funds in a money laundering case was to conceal its ownership, source or control. Justice Thomas and the court ruled in favor of Humberto Cuellar, who was headed for Mexico with over $80,000 stashed in a secret compartment of a car when he was arrested in Schleicher County, Texas. The 5th U.S. Circuit Court of Appeals in New Orleans had upheld Mr. Cuellar's money-laundering conviction. Money laundering carries a maximum penalty of 20 years in prison and prosecutors often use it in drug and gambling cases. Congress enacted the anti-money laundering law in 1986 after the President's Commission on Organized Crime highlighted the growing problem of "washing" criminal proceeds through overseas bank accounts and legitimate businesses. The cases are U.S. v. Santos, 06-1005, and Cuellar v. U.S., 06-1456. Publisher's Suit Against Visa, MasterCard Fails The court turned away the latest appeal from Perfect 10 Inc., which sued Visa Inc. and MasterCard International Inc. for allegedly allowing their transaction networks to be used by Web sites that pirate images of nude models. Perfect 10, an adult online magazine, has sued several financial services companies, alleging they aided in copyright and trademark violations. A similar appeal involving CCBill Inc. was rejected by the high court last year. The company also has sued Google Inc. "The Internet makes possible copyright infringement on a mind-boggling scale," Perfect 10 said in the appeal, adding that it believes an appeals court ruling in the case "is bound to wreak disproportionate havoc on federal copyright law." Perfect 10 sued the two companies, which dominate the credit-card industry, in an effort to stop Web sites that pirate erotic photos from using Visa and MasterCard to process payment transactions. A federal trial judge threw the lawsuit out. Last year, the 9th U.S. Circuit Court of Appeals in San Francisco agreed that Perfect 10 didn't have a case under federal copyright law against the credit-card companies for what is known as secondary copyright liability. In a friend-of-the-court brief, the Motion Picture Association, Recording Industry Association of America and other entertainment groups urged the Supreme Court to hear Perfect 10's appeal. "The decision is particularly harmful to copyright owners' ability to combat piracy that is perpetrated from foreign locations" the groups said. Visa and MasterCard, in a reply brief, said Perfect 10 and the entertainment industry are wrongly trying to forge a "new legal obligation to deny payment network access to third parties' based on copyright violation allegations. The case is Perfect 10 v. Visa International Service Association. Hyperlinks in this Article: (1) http://online.wsj.com/public/resources/documents/scotus-op-santos06022008.p… (2) http://online.wsj.com/public/resources/documents/scotus-op-cuellar06022008.… (3) http://online.wsj.com/public/resources/documents/info-scotusdiary-071002.ht… (4) http://online.wsj.com/article/SB121189746412322783.html (5) http://online.wsj.com/article/SB121120201571003423.html (6) http://online.wsj.com/article/SB121060066203485187.html (7) http://online.wsj.com/article/SB120939053697249475.html

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02 Jun '08

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02 Jun '08

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02 Jun '08

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