United States v. Santos, 553 U.S. 507 (2008)

UNITED STATES v. SANTOS et al.

certiorari to the united states court of appeals for the seventh circuit

No. 06–1005. Argued October 3, 2007—Decided June 2, 2008

In an illegal lottery run by respondent Santos, runners took commissions from the bets they gathered, and some of the rest of the money was paid as salary to respondent Diaz and other collectors and to the win ning gamblers. Based on these payments to runners, collectors, and winners, Santos was convicted of, inter alia, violating the federal money-laundering statute, 18 U. S. C. § 1956, which prohibits the use of the “proceeds” of criminal activities for various purposes, including en gaging in, and conspiring to engage in, transactions intended to promote the carrying on of unlawful activity, § 1956(a)(1)(A)(i) and § 1956(h). Based on his receipt of salary, Diaz pleaded guilty to conspiracy to laun der money. The Seventh Circuit affirmed the convictions. On collat eral review, the District Court ruled that, under intervening Circuit precedent interpreting the word “proceeds” in the federal money laundering statute, § 1956(a)(1)(A)(i) applies only to transactions involv ing criminal profits, not criminal receipts. Finding no evidence that the transactions on which respondents’ money-laundering convictions were based involved lottery profits, the court vacated those convictions. The Seventh Circuit affirmed.

Held: The judgment is affirmed.

461 F. 3d 886, affirmed.

Justice Scalia, joined by Justice Souter, Justice Thomas, and Justice Ginsburg, concluded in Parts I–III and V that the term “pro ceeds” in § 1956(a)(1) means “profits,” not “receipts.” Pp. 510–521, 524.

(a) The rule of lenity dictates adoption of the “profits” reading. The statute nowhere defines “proceeds.” An undefined term is generally given its ordinary meaning. Asgrow Seed Co. v. Winterboer, 513 U. S. 179, 187. However, dictionaries and the Federal Criminal Code some times define “proceeds” to mean “receipts” and sometimes “profits.” Moreover, the many provisions in the federal money-laundering statute that use the word “proceeds” make sense under either definition. The rule of lenity therefore requires the statute to be interpreted in favor of defendants, and the “profits” definition of “proceeds” is always more defendant-friendly than the “receipts” definition. Pp. 510–514.

(b) The Government’s contention that the “profits” interpretation fails to give the money-laundering statute its intended scope begs the

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question; the Government’s contention that the “profits” interpretation hinders effective enforcement of the law is exaggerated. Neither suf fices to overcome the rule of lenity. Pp. 514–521.

(c) None of the transactions on which respondents’ money-laundering convictions were based can fairly be characterized as involving the lot tery’s profits. P. 524.

Justice Scalia, joined by Justice Souter and Justice Ginsburg, concluded in Part IV that Justice Stevens’ position that “proceeds” should be interpreted to mean “profits” for some predicate crimes, “re ceipts” for others, is contrary to this Court’s precedents holding that judges cannot give the same statutory text different meanings in differ ent cases, see Clark v. Martinez, 543 U. S. 371. Pp. 521–524.

Justice Stevens concluded that revenue a gambling business uses to pay essential operating expenses is not “proceeds” under 18 U. S. C. § 1956. When, as here, Congress fails to define potentially ambiguous statutory terms, it effectively delegates the task to federal judges. See Commissioner v. Fink, 483 U. S. 89, 104. Because Congress could have required that “proceeds” have one meaning when referring to some of the specified unlawful activities listed in § 1956(c)(7) and a different meaning when referring to others, judges filling statutory gaps may also do so, as long as they are conscientiously endeavoring to carry out Congress’ intent. Section 1956’s legislative history makes clear that “proceeds” includes gross revenues from the sale of contraband and the operation of organized crime syndicates involving such sales, but sheds no light on how to identify the proceeds of an unlicensed stand-alone gambling venture. Furthermore, the consequences of applying a “gross receipts” definition of “proceeds” to respondents are so perverse that Congress could not have contemplated them: Allowing the Government to treat the mere payment of an illegal gambling business’ operating expenses as a separate offense is in practical effect tantamount to double jeopardy, which is particularly unfair in this case because the penalties for money laundering are substantially more severe than those for the underlying offense of operating a gambling business. Accordingly, the rule of lenity may weigh in the determination, and in that respect the plurality’s opinion is persuasive. Pp. 524–528.

Scalia, J., announced the judgment of the Court and delivered an opin ion, in which Souter and Ginsburg, JJ., joined, and in which Thomas, J., joined as to all but Part IV. Stevens, J., filed an opinion concurring in the judgment, post, p. 524. Breyer, J., filed a dissenting opinion, post, p. 529. Alito, J., filed a dissenting opinion, in which Roberts, C. J., and Kennedy and Breyer, JJ., joined, post, p. 531.

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Matthew D. Roberts argued the cause for the United States. With him on the briefs were former Solicitor Gen eral Clement, Assistant Attorney General Fisher, Deputy Solicitor General Dreeben, and Joel M. Gershowitz.

Todd G. Vare argued the cause for respondents. With him on the brief for respondent Efrain Santos was Paul L. Jeffer son. Stuart Altschuler filed a brief for respondent Bene dicto Diaz.*

Justice Scalia announced the judgment of the Court and delivered an opinion, in which Justice Souter and Justice Ginsburg join, and in which Justice Thomas joins as to all but Part IV.

We consider whether the term “proceeds” in the federal money-laundering statute, 18 U. S. C. § 1956(a)(1), means “re ceipts” or “profits.”

I

From the 1970’s until 1994, respondent Santos operated a lottery in Indiana that was illegal under state law. See Ind. Code § 35–45–5–3 (West 2004). Santos employed a number of helpers to run the lottery. At bars and restaurants, San tos’s runners gathered bets from gamblers, kept a portion of the bets (between 15% and 25%) as their commissions, and delivered the rest to Santos’s collectors. Collectors, one of whom was respondent Diaz, then delivered the money to Santos, who used some of it to pay the salaries of collectors (including Diaz) and to pay the winners.

These payments to runners, collectors, and winners formed the basis of a 10-count indictment filed in the United States District Court for the Northern District of Indiana, naming Santos, Diaz, and 11 others. A jury found Santos guilty of one count of conspiracy to run an illegal gambling business (18 U. S. C. § 371), one count of running an illegal

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gambling business (§ 1955), one count of conspiracy to laun der money (§ 1956(a)(1)(A)(i) and § 1956(h)), and two counts of money laundering (§ 1956(a)(1)(A)(i)). The court sentenced Santos to 60 months of imprisonment on the two gambling counts and to 210 months of imprisonment on the three money-laundering counts. Diaz pleaded guilty to conspiracy to launder money, and the District Court sentenced him to 108 months of imprisonment. The Court of Appeals af firmed the convictions and sentences. United States v. Febus, 218 F. 3d 784 (CA7 2000). We declined to review the case. 531 U. S. 1021 (2000).

Thereafter, respondents filed motions under 28 U. S. C. § 2255, collaterally attacking their convictions and sentences. The District Court rejected all of their claims but 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 in volving criminal “proceeds” applies only to transactions in volving criminal profits, not criminal receipts. Id., at 478. Applying that holding to respondents’ cases, the District Court found no evidence that the transactions on which the money-laundering convictions were based (Santos’s pay ments to runners, winners, and collectors and Diaz’s receipt of payment for his collection services) involved profits, as opposed to receipts, of the illegal lottery, and accordingly vacated the money-laundering convictions. The Court of Appeals affirmed, rejecting the Government’s contention that Scialabba was wrong and should be overruled. 461 F. 3d 886 (CA7 2006). We granted certiorari. 550 U. S. 902 (2007).

II

The federal money-laundering statute prohibits a number of activities involving criminal “proceeds.” Most relevant to this case is 18 U. S. C. § 1956(a)(1)(A)(i), which criminalizes

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transactions to promote criminal activity.1 This provision uses the term “proceeds” in describing two elements of the offense: The Government must prove that a charged transac tion “in fact involve[d] the proceeds of specified unlawful ac tivity” (the proceeds element), and it also must prove that a defendant knew “that the property involved in” the charged transaction “represent[ed] the proceeds of some form of un lawful activity” (the knowledge element). § 1956(a)(1).

The federal money-laundering statute does not define “proceeds.” When a term is undefined, we give it its ordi nary meaning. Asgrow Seed Co. v. Winterboer, 513 U. S. 179, 187 (1995). “Proceeds” can mean either “receipts” or “profits.” Both meanings are accepted, and have long been accepted, in ordinary usage. See, e. g., 12 Oxford English Dictionary 544 (2d ed. 1989); Random House Dictionary of the English Language 1542 (2d ed. 1987); Webster’s New In ternational Dictionary 1972 (2d ed. 1954) (hereinafter Web ster’s 2d). The Government contends that dictionaries gen erally prefer the “receipts” definition over the “profits” definition, but any preference is too slight for us to conclude that “receipts” is the primary meaning of “proceeds.”

“Proceeds,” moreover, has not acquired a common meaning in the provisions of the Federal Criminal Code. Most leave the term undefined. See, e. g., 18 U. S. C. § 1963; 21 U. S. C. § 853. Recognizing the word’s inherent ambiguity, Congress

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has defined “proceeds” in various criminal provisions, but sometimes has defined it to mean “receipts” and some times “profits.” Compare 18 U. S. C. § 2339C(e)(3) (2000 ed., Supp. V) (receipts), § 981(a)(2)(A) (2000 ed.) (same), with § 981(a)(2)(B) (profits).

Since context gives meaning, we cannot say the money laundering statute is truly ambiguous until we consider “pro ceeds” not in isolation but as it is used in the federal money laundering statute. See United Sav. Assn. of Tex. v. Timbers of Inwood Forest Associates, Ltd., 484 U. S. 365, 371 (1988). The word appears repeatedly throughout the stat ute, but all of those appearances leave the ambiguity intact. Section 1956(a)(1) itself, for instance, makes sense under either definition: One can engage in a financial transaction with either receipts or profits of a crime; one can intend to promote the carrying on of a crime with either its receipts or its profits; and one can try to conceal the nature, location, etc., of either receipts or profits. The same is true of all the other provisions of this legislation in which the term “pro ceeds” is used. They make sense under either definition. See, for example, § 1956(a)(2)(B), which speaks of “proceeds” represented by a “monetary instrument or funds.”

Justice Alito’s dissent (the principal dissent) makes much of the fact that 14 States that use and define the word “proceeds” in their money-laundering statutes,2 the Model

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Money Laundering Act, and an international treaty on the subject, all define the term to include gross receipts. See post, at 533–535. We do not think this evidence shows that the drafters of the federal money-laundering statute used “proceeds” as a term of art for “receipts.” Most of the state laws cited by the dissent, the Model Act, and the treaty post date the 1986 federal money-laundering statute by several years, so Congress was not acting against the backdrop of those definitions when it enacted the federal statute. If anything, they show that “proceeds” is ambiguous and that others who believed that money-laundering statutes ought to include gross receipts sought to clarify the ambiguity that Congress created when it left the term undefined.3

Under either of the word’s ordinary definitions, all provi sions of the federal money-laundering statute are coherent;

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no provisions are redundant; and the statute is not rendered utterly absurd. From the face of the statute, there is no more reason to think that “proceeds” means “receipts” than there is to think that “proceeds” means “profits.” Under a long line of our decisions, the tie must go to the defendant. The rule of lenity requires ambiguous criminal laws to be interpreted in favor of the defendants subjected to them. See United States v. Gradwell, 243 U. S. 476, 485 (1917); McBoyle v. United States, 283 U. S. 25, 27 (1931); United States v. Bass, 404 U. S. 336, 347–349 (1971). This venerable rule not only vindicates the fundamental principle that no citizen should be held accountable for a violation of a statute whose commands are uncertain, or subjected to punishment that is not clearly prescribed. It also places the weight of inertia upon the party that can best induce Congress to speak more clearly and keeps courts from making criminal law in Congress’s stead. Because the “profits” definition of “proceeds” is always more defendant-friendly than the “re ceipts” definition, the rule of lenity dictates that it should be adopted.

III

Stopping short of calling the “profits” interpretation ab surd, the Government contends that the interpretation should nonetheless be rejected because it fails to give the federal money-laundering statute its proper scope and be cause it hinders effective enforcement of the law. Neither contention overcomes the rule of lenity.

A

According to the Government, if we do not read “proceeds” to mean “receipts,” we will disserve the purpose of the fed eral money-laundering statute, which is, the Government says, to penalize criminals who conceal or promote their ille gal activities. On the Government’s view, “[t]he gross re ceipts of a crime accurately reflect the scale of the criminal activity, because the illegal activity generated all of the

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funds.” Brief for United States 21; see also post, at 535–537 (Alito, J., dissenting).

When interpreting a criminal statute, we do not play the part of a mindreader. In our seminal rule-of-lenity decision, Chief Justice Marshall rejected the impulse to speculate re garding a dubious congressional intent. “[P]robability is not a guide which a court, in construing a penal statute, can safely take.” United States v. Wiltberger, 5 Wheat. 76, 105 (1820). And Justice Frankfurter, writing for the Court in another case, said the following: “When Congress leaves to the Judiciary the task of imputing to Congress an undeclared will, the ambiguity should be resolved in favor of lenity.” Bell v. United States, 349 U. S. 81, 83 (1955).

The statutory purpose advanced by the Government to construe “proceeds” is a textbook example of begging the question. To be sure, if “proceeds” meant “receipts,” one could say that the statute was aimed at the dangers of con cealment and promotion. But whether “proceeds” means “receipts” is the very issue in the case. If “proceeds” means “profits,” one could say that the statute is aimed at the dis tinctive danger that arises from leaving in criminal hands the yield of a crime. A rational Congress could surely have decided that the risk of leveraging one criminal activity into the next poses a greater threat to society than the mere pay ment of crime-related expenses and justifies the money laundering statute’s harsh penalties.

If we accepted the Government’s invitation to speculate about congressional purpose, we would also have to confront and explain the strange consequence of the “receipts” inter pretation, which respondents have described as a “merger problem.” See, e. g., Brief for Respondent Diaz 34. If “pro ceeds” meant “receipts,” nearly every violation of the illegal-lottery statute would also be a violation of the money-laundering statute, because paying a winning bettor is a transaction involving receipts that the defendant intends to promote the carrying on of the lottery. Since few lotter

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ies, if any, will not pay their winners, the statute criminaliz ing illegal lotteries, 18 U. S. C. § 1955, would “merge” with the money-laundering statute. Congress evidently decided that lottery operators ordinarily deserve up to 5 years of imprisonment, § 1955(a), but as a result of merger they would face an additional 20 years, § 1956(a)(1). Prosecutors, of course, would acquire the discretion to charge the lesser lottery offense, the greater money-laundering offense, or both—which would predictably be used to induce a plea bar gain to the lesser charge.

The merger problem is not limited to lottery operators. For a host of predicate crimes, merger would depend on the manner and timing of payment for the expenses associated with the commission of the crime. Few crimes are entirely free of cost, and costs are not always paid in advance. Any one who pays for the costs of a crime with its proceeds—for example, the felon who uses the stolen money to pay for the rented getaway car—would violate the money-laundering statute. And any wealth-acquiring crime with multiple par ticipants would become money laundering when the initial recipient of the wealth gives his confederates their shares.4 Generally speaking, any specified unlawful activity, an epi sode of which includes transactions which are not elements of the offense and in which a participant passes receipts on to someone else, would merge with money laundering. There are more than 250 predicate offenses for the money laundering statute, see Dept. of Justice, Bureau of Justice Statistics, M. Motivans, Money Laundering Offenders, 1994–2001, p. 2 (2003), online at http://www.ojp.usdoj.gov/ bjs/pub/ pdf/mlo01.pdf (as visited May 29, 2008, and available in Clerk

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of Court’s case file), and many foreseeably entail such trans actions, see 18 U. S. C. § 1956(c)(7) (2000 ed. and Supp. V) (establishing as predicate offenses a number of illegal traf ficking and selling offenses, the expenses of which might be paid after the illegal transportation or sale).

The Government suggests no explanation for why Con gress would have wanted a transaction that is a normal part of a crime it had duly considered and appropriately punished elsewhere in the Criminal Code to radically increase the sen tence for that crime. Interpreting “proceeds” to mean “profits” eliminates the merger problem. Transactions that normally occur during the course of running a lottery are not identifiable uses of profits and thus do not violate the money-laundering statute. More generally, a criminal who enters into a transaction paying the expenses of his illegal activity cannot possibly violate the money-laundering stat ute, because by definition profits consist of what remains after expenses are paid. Defraying an activity’s costs with its receipts simply will not be covered.

The principal dissent suggests that a solution to the merger problem may be found in giving a narrow interpre tation to the “promotion prong” of the statute: A defendant might be deemed not to “promote” illegal activity “by doing those things . . . that are needed merely to keep the business running,” post, at 547–548, because promotion (presumably) means doing things that will cause a business to grow. See Webster’s 2d, at 1981 (giving as one of the meanings of “promote” “[t]o contribute to the growth [or] enlargement” of something). (This argument is embraced by Justice Breyer’s dissent as well. See post, at 530.) The federal money-laundering statute, however, bars not the bare act of promotion, but engaging in certain transactions “with the intent to promote the carrying on of specified unlawful activ ity.” 18 U. S. C. § 1956(a)(1)(A)(i) (2000 ed.) (emphasis added). In that context the word naturally bears one of its other meanings, such as “[t]o contribute to the . . . prosper

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ity” of something, or to “further” something. See Webster’s 2d, at 1981. Surely one promotes “the carrying on” of a gambling enterprise by merely ensuring that it continues in business.5 In any event, to believe that this “narrow” inter pretation of “promote” would solve the merger problem one must share the dissent’s misperception that the statute ap plies just to the conduct of ongoing enterprises rather than individual unlawful acts. If the predicate act is theft by an individual, it makes no sense to ask whether an expenditure was intended to “grow” the culprit’s theft business. The merger problem thus stands as a major obstacle to the dis sent’s interpretation of “proceeds.”

Justice Breyer admits that the merger problem casts doubt on the Government’s position, post, at 529, but believes there are “other, more legally felicitous” solutions to the problem, post, at 530. He suggests that the merger problem could be solved by holding that “the money laundering of fense and the underlying offense that generated the money to be laundered must be distinct in order to be separately punishable.” Ibid. The insuperable difficulty with this so lution is that it has no basis whatever in the words of the statute. Even assuming (as one should not) the propriety of a judicial rewrite, why should one believe that Congress wanted courts to avoid the merger problem in that unusual fashion, rather than by adopting one of the two possible meanings of an ambiguous term? Justice Breyer pins

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hope on the possibility, “if the ‘merger’ problem is essentially a problem of fairness in sentencing,” that the United States Sentencing Commission might revise its recommended sen tences for money laundering. Ibid. See also principal dis sent, post, at 547 (in agreement). Even if that is a possibil ity, it is not a certainty. And once again, why should one choose this chancy method of solving the problem, rather than interpret ambiguous language to avoid it? In any event, as noted, supra, at 515–516, the merger problem af fects more than just sentencing; it affects charging decisions and plea bargaining as well.

B

The Government also argues for the “receipts” interpre tation because—quite frankly—it is easier to prosecute. Proving the proceeds and knowledge elements of the federal money-laundering offense under the “profits” interpretation will unquestionably require proof that is more difficult to obtain. Essentially, the Government asks us to resolve the statutory ambiguity in light of Congress’s presumptive intent to facilitate money-laundering prosecutions. That position turns the rule of lenity upside down. We interpret ambiguous criminal statutes in favor of defendants, not prosecutors.

It is true that the “profits” interpretation demands more from the Government than the “receipts” interpretation. Not so much more, however, as to render such a disposition inconceivable—as proved by the fact that Congress has im posed similar proof burdens upon the prosecution elsewhere. See 18 U. S. C. § 1963(a) (criminal forfeiture provision requir ing determination of “gross profits or other proceeds”); 21 U. S. C. § 853(a) (same).6 It is untrue that the added burdens

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“serve no discernible purpose.” Post, at 542 (Alito, J., dis senting). They ensure that the severe money-laundering penalties will be imposed only for the removal of profits from criminal activity, which permit the leveraging of one crimi nal activity into the next. See supra, at 515.

In any event, the Government exaggerates the difficulties. The “proceeds of specified unlawful activity” are the pro ceeds from the conduct sufficient to prove one predicate of fense. Thus, to establish the proceeds element under the “profits” interpretation, the prosecution needs to show only that a single instance of specified unlawful activity was profitable and gave rise to the money involved in a charged transaction. And the Government, of course, can select the instances for which the profitability is clearest. Contrary to the principal dissent’s view, post, at 536, 540–542, the fact finder will not need to consider gains, expenses, and losses at tributable to other instances of specified unlawful activity, which go to the profitability of some entire criminal enterprise. What counts is whether the receipts from the charged unlaw ful act exceeded the costs fairly attributable to it.7

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When the Government charges an “enterprise” crime as the predicate offense, see, e. g., 18 U. S. C. § 1956(c)(7)(C), it will have to prove the profitability of only the conduct sufficient to violate the enterprise statute. That is typically defined as a “continuing series of violations,” 21 U. S. C. § 848(c)(2), which would presumably be satisfied by three vio lations, see Richardson v. United States, 526 U. S. 813, 818 (1999). Thus, the Government will have to prove the profitability of just three offenses, selecting (again) those for which profitability is clearest. And of course a prosecutor will often be able to charge the underlying crimes instead of the overarching enterprise crime.

As for the knowledge element of the money-laundering of fense—knowledge that the transaction involves profits of un lawful activity—that will be provable (as knowledge must almost always be proved) by circumstantial evidence. For example, someone accepting receipts from what he knows to be a long-continuing drug-dealing operation can be found to know that they include some profits. And a jury could infer from a long-running launderer-criminal relationship that the launderer knew he was hiding the criminal’s profits. More over, the Government will be entitled to a willful blindness instruction if the professional money launderer, aware of a high probability that the laundered funds were profits, delib erately avoids learning the truth about them—as might be the case when he knows that the underlying crime is one that is rarely unprofitable.

IV

Concurring in the judgment, Justice Stevens expresses the view that the rule of lenity applies to this case because there is no legislative history reflecting any legislator’s belief

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about how the money-laundering statute should apply to lot tery operators. See post, at 526, 528. The rule of lenity might not apply, he thinks, in a case involving an organized crime syndicate or the sale of contraband because the legisla tive history supposedly contains some views on the meaning of “proceeds” in those circumstances.8 See post, at 525–526, and n. 3. In short, Justice Stevens would interpret “pro ceeds” to mean “profits” for some predicate crimes, “re ceipts” for others.

Justice Stevens’ position is original with him; neither the United States nor any amicus suggested it; it has no precedent in our cases. Justice Stevens relies on the proposition that one undefined word, repeated in different statutory provisions, can have different meanings in each provision. See post, at 525, and n. 2. But that is worlds apart from giving the same word, in the same statutory provi sion, different meanings in different factual contexts. Not only have we never engaged in such interpretive contortion; just over three years ago, in an opinion joined by Justice Stevens, we forcefully rejected it. Clark v. Martinez, 543 U. S. 371 (2005), held that the meaning of words in a statute cannot change with the statute’s application. See id., at 378. To hold otherwise “would render every statute a chameleon,” id., at 382, and “would establish within our jurisprudence . . . the dangerous principle that judges can give the same statu

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tory text different meanings in different cases,” id., at 386. Precisely to avoid that result, our cases often “give a stat ute’s ambiguous language a limiting construction called for by one of the statute’s applications, even though other of the statute’s applications, standing alone, would not support the same limitation. The lowest common denominator, as it were, must govern.” Id., at 380 (emphasis added).

Our obligation to maintain the consistent meaning of words in statutory text does not disappear when the rule of lenity is involved. To the contrary, we have resolved an ambiguity in a tax statute in favor of the taxpayer in a civil case because the statute had criminal applications that trig gered the rule of lenity. See United States v. Thompson/ Center Arms Co., 504 U. S. 505, 517–518, and n. 10 (1992) (plurality opinion). If anything, the rule of lenity is an addi tional reason to remain consistent, lest those subject to the criminal law be misled. And even if, as Justice Stevens contends, post, at 524, statutory ambiguity “effectively” li censes us to write a brand-new law, we cannot accept that power in a criminal case, where the law must be written by Congress. See United States v. Hudson, 7 Cranch 32, 34 (1812).

We think it appropriate to add a word concerning the stare decisis effect of Justice Stevens’ opinion. Since his vote is necessary to our judgment, and since his opinion rests upon the narrower ground, the Court’s holding is limited ac cordingly. See Marks v. United States, 430 U. S. 188, 193 (1977). But the narrowness of his ground consists of finding that “proceeds” means “profits” when there is no legislative history to the contrary. That is all that our judgment holds. It does not hold that the outcome is different when contrary legislative history does exist. Justice Stevens’ specula tions on that point address a case that is not before him, are the purest of dicta, and form no part of today’s holding. Thus, as far as this particular statute is concerned, counsel remain free to argue Justice Stevens’ view (and to explain

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why it does not overrule Clark v. Martinez, supra). They should be warned, however: Not only do the Justices joining this opinion reject that view, but so also (apparently) do the Justices joining the principal dissent. See post, at 532, 546.

V

The money-laundering charges brought against Santos were based on his payments to the lottery winners and his employees, and the money-laundering charge brought against Diaz was based on his receipt of payments as an em ployee. Neither type of transaction can fairly be character ized as involving the lottery’s profits. Indeed, the Govern ment did not try to prove, and respondents have not admitted, that they laundered criminal profits. We accord ingly affirm the judgment of the Court of Appeals.

Justice Stevens, concurring in the judgment.

When Congress fails to define potentially ambiguous statu tory terms, it effectively delegates to federal judges the task of filling gaps in a statute. See Commissioner v. Fink, 483 U. S. 89, 104 (1987) (Stevens, J., dissenting) (“In the process of legislating it is inevitable that Congress will leave open spaces in the law that the courts are implicitly authorized to fill”). Congress has included definitions of the term “pro ceeds” in some criminal statutes,1 but it has not done so in 18 U. S. C. § 1956 (2000 ed. and Supp. V), the money laundering statute at issue in this case. That statute is somewhat unique because it applies to the proceeds of a varied and lengthy list of specified unlawful activities, see § 1956(c)(7) (defining “specified unlawful activity” to include, inter alia,

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controlled substance violations, murder, bribery, smuggling, various forms of fraud, concealment of assets, various envi ronmental offenses, and health care offenses).

Although it did not do so, it seems clear that Congress could have provided that the term “proceeds” shall have one meaning when referring to some specified unlawful activities and a different meaning when referring to others. In fact, in the general civil forfeiture statute, § 981, Congress did provide two different definitions of “proceeds,” recognizing that—for a subset of activities—“proceeds” must allow for the deduction of costs. Compare § 981(a)(2)(A) (2000 ed.) (defining “proceeds” in cases involving illegal goods and serv ices to mean “property of any kind obtained directly or indi rectly . . . not limited to the net gain or profit realized from the offense”) with § 981(a)(2)(B) (defining “proceeds” with re spect to lawful goods sold in an illegal manner as the amount of money acquired “less the direct costs incurred in provid ing the goods or services”).

We have previously recognized that the same word can have different meanings in the same statute.2 If Congress could have expressly defined the term “proceeds” differently when applied to different specified unlawful activities, it seems to me that judges filling the gap in a statute with such a variety of applications may also do so, as long as they are conscientiously endeavoring to carry out the intent of Con gress. Therefore, contrary to what Justice Alito and the plurality state, see post, at 546 (dissenting opinion); ante, at 522–523 (plurality opinion), this Court need not pick a single definition of “proceeds” applicable to every unlawful activity, no matter how incongruous some applications may be.

As Justice Alito rightly argues, the legislative history of § 1956 makes it clear that Congress intended the term

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“proceeds” to include gross revenues from the sale of contra band and the operation of organized crime syndicates involv ing such sales.3 But that history sheds no light on how to identify the proceeds of many other types of specified unlaw ful activities. For example, one specified unlawful activity is the conduct proscribed by § 541, “Entry of goods falsely classified.” Section 541 provides that “[w]hoever knowingly effects any entry of goods, wares, or merchandise, at less than the true weight or measure thereof, or upon a false classification as to quality or value, or by the payment of less than the amount of duty legally due, shall be . . . imprisoned not more than two years.” Conceivably the “proceeds” stemming from a violation of § 541 could be either the money realized by misstating the value—that is, the amount by which the criminal “profits” by paying reduced duties—or the total price at which the goods are later sold, even though the misclassification had only a trivial impact on that price.

Just as the legislative history fails to tell us how to calcu late the “proceeds” of violations of § 541, it is equally silent on the proceeds of an unlicensed stand-alone gambling ven ture. The consequences of applying a “gross receipts” defi nition of “proceeds” to the gambling operation conducted by respondents are so perverse that I cannot believe they were contemplated by Congress, particularly given the fact that nothing in Justice Alito’s thorough review of the legisla tive history indicates otherwise.4

Constrained by a holding that the payment of expenses constitutes “promotion,”5 Justice Alito’s opinion runs

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squarely into what can be characterized as the “merger” problem. Allowing the Government to treat the mere pay ment of the expense of operating an illegal gambling busi ness as a separate offense is in practical effect tantamount to double jeopardy, which is particularly unfair in this case because the penalties for money laundering are substantially more severe than those for the underlying offense of operat ing a gambling business. A money laundering conviction in creases the statutory maximum from 5 to 20 years, and the Sentencing Commission has prescribed different Guidelines ranges for the two crimes.6 When a defendant has a sig nificant criminal history or Guidelines enhancements apply, the statutory cap of five years in § 1955 is an important limi tation on a defendant’s sentence—a limitation that would be eviscerated if Justice Alito’s definition of “proceeds” were applied in this case.

Justice Alito and Justice Breyer suggest that the ad visory nature of the Guidelines post-Booker, United States v. Booker, 543 U. S. 220 (2005), or the possibility of an amend ment to the money laundering Guideline, would soften this blow, post, at 547 (opinion of Alito, J.); post, at 530–531 (dis senting opinion of Breyer, J.), and indeed they could. But the result in the case at hand might not be softened at all

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by resort to Booker because respondents’ direct appeal was decided in 2000, several years prior to our decision in Booker. If Justice Alito’s opinion were to carry the day, both re spondents would return to prison to serve the remainder of their lengthy sentences.

The revenue generated by a gambling business that is used to pay the essential expenses of operating that business is not “proceeds” within the meaning of the money laundering statute. As the plurality notes, there is “no explanation for why Congress would have wanted a transaction that is a nor mal part of a crime it had duly considered and appropriately punished elsewhere in the Criminal Code to radically in crease the sentence for that crime.” Ante, at 517. This conclusion dovetails with what common sense and the rule of lenity would require. Faced with both a lack of legislative history speaking to the definition of “proceeds” when operat ing a gambling business is the “specified unlawful activity” and my conviction that Congress could not have intended the perverse result that would obtain in this case under Justice Alito’s opinion, the rule of lenity may weigh in the determi nation. And in that respect the plurality’s opinion is surely persuasive.7 Accordingly, I concur in the judgment.

Breyer, J., dissenting

Justice Breyer, dissenting.

I join Justice Alito’s dissent while adding the follow ing observations about what has been referred to as the “ ‘merger problem.’ ” Ante, at 515 (plurality opinion). Like the plurality, I doubt that Congress intended the money laundering statute automatically to cover financial transac tions that constitute an essential part of a different underly ing crime. Operating an illegal gambling business, for ex ample, inevitably involves investment in overhead as well as payments to employees and winning customers; a drug offense normally involves payment for drugs; and bank rob bery may well require the distribution of stolen cash to con federates. If the money laundering statute applies to this kind of transaction (i. e., if the transaction is automatically a “financial transaction” that “involves the proceeds of speci fied unlawful activity” made “with the intent to promote the carrying on of specified unlawful activity”), then the Govern ment can seek a heavier money laundering penalty (say, 20 years), even though the only conduct at issue is conduct that warranted a lighter penalty (say, 5 years for illegal gam bling). 18 U. S. C. § 1956(a)(1).

It is difficult to understand why Congress would have intended the Government to possess this punishment transforming power. Perhaps for this reason, the Tenth Circuit has written that “Congress aimed the crime of money laundering at conduct that follows in time the underlying crime rather than to afford an alternative means of punishing the prior ‘specified unlawful activity.’ ” United States v. Edgmon, 952 F. 2d 1206, 1214 (1991). And, in 1997, the United States Sentencing Commission told Congress that it agreed with the Department of Justice that “money launder ing cannot properly be charged for ‘merged’ transactions that are part of the underlying crime.” Report to Congress:

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Sentencing Policy for Money Laundering Offenses, including Comments on Dept. of Justice Report, p. 16 (Sept. 1997), on line at http://www.ussc.gov/r_congress/launder.pdf (as visited May 20, 2008, and available in Clerk of Court’s case file).

Thus, like the plurality, I see a “merger” problem. But, unlike the plurality, I do not believe that we should look to the word “proceeds” for a solution. For one thing, the plu rality’s interpretation of that word creates the serious logical and practical difficulties that Justice Alito describes. See post, at 537–542 (dissenting opinion) (describing difficulties associated with proof and accounting). For another thing, there are other, more legally felicitous places to look for a solution. The Tenth Circuit, for example, has simply held that the money laundering offense and the underlying of fense that generated the money to be laundered must be dis tinct in order to be separately punishable. Edgmon, supra, at 1214. Alternatively the money laundering statute’s phrase “with the intent to promote the carrying on of speci fied unlawful activity” may not apply where, for example, only one instance of that underlying activity is at issue. (The Seventh Circuit on a prior appeal in this case rejected that argument, and thus we do not consider it here. See United States v. Febus, 218 F. 3d 784, 789 (2000).)

Finally, if the “merger” problem is essentially a problem of fairness in sentencing, the Sentencing Commission has ad equate authority to address it. Congress has instructed the Commission to “avoi[d] unwarranted sentencing disparities” among those “found guilty of similar criminal conduct.” 28 U. S. C. § 991(b)(1)(B) (emphasis added); see also § 994(f) (in structing the Commission to pay particular attention to those disparities). The current money laundering Guideline, United States Sentencing Commission, Guidelines Manual § 2S1.1 (Nov. 2007), by making no exception for a situation where nothing but a single instance of the underlying crime has taken place, would seem to create a serious and unwar ranted disparity among defendants who have engaged in

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identical conduct. My hope is that the Commission’s past efforts to tie more closely the offense level for money laun dering to the offense level of the underlying crime, see id., Supp. to App. C, Amdt. 634 (Nov. 2001), suggest a willingness to consider directly this kind of disparity. Such an approach could solve the “merger” problem without resort to creat ing complex interpretations of the statute’s language. And any such solution could be applied retroactively. See 28 U. S. C. § 994(u).

In light of these alternative possibilities, I dissent.

Justice Alito, with whom The Chief Justice, Justice Kennedy, and Justice Breyer join, dissenting.

Fairly read, the term “proceeds,” as used in the principal federal money laundering statute, 18 U. S. C. § 1956(a), means “the total amount brought in,” the primary dictionary definition. Webster’s Third New International Dictionary 1807 (1976) (hereinafter Webster’s 3d). See also Random House Dictionary of the English Language 1542 (2d ed. 1987) (“the total amount derived from a sale or other transaction”). The plurality opinion, however, makes no serious effort to interpret this important statutory term. Ignoring the con text in which the term is used, the problems that the money laundering statute was enacted to address, and the obvious practical considerations that those responsible for drafting the statute almost certainly had in mind, that opinion is quick to pronounce the term hopelessly ambiguous and thus to invoke the rule of lenity. Concluding that “proceeds” means “profits,” the plurality opinion’s interpretation would frustrate Congress’ intent and maim a statute that was enacted as an important defense against organized criminal enterprises.

Fortunately, Justice Stevens’ opinion recognizes that the term “proceeds” “include[s] gross revenues from the sale of contraband and the operation of organized crime syndi cates involving such sales.” Ante, at 526 (opinion concur

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ring in judgment).1 I cannot agree with Justice Stevens’ approach insofar as it holds that the meaning of the term “proceeds” varies depending on the nature of the illegal ac tivity that produces the laundered funds, but at least that approach preserves the correct interpretation of the statute in most of the cases that were the focus of congressional concern when the money laundering statute was enacted.

I

A

While the primary definition of the term “proceeds” is “the total amount brought in,” I recognize that the term may also be used to mean “net profit,” Webster’s 3d 1807, and I do not suggest that the question presented in this case can be answered simply by opening a dictionary. When a word has more than one meaning, the meaning that is intended is often made clear by the context in which the word is used, and thus in this case, upon finding that the term “proceeds” may mean both “the total amount brought in” and “net profit,” the appropriate next step is not to abandon any effort at interpretation and summon in the rule of lenity. Rather, the next thing to do is to ask what the term “proceeds” custom arily means in the context that is relevant here—a money laundering statute.

The federal money laundering statute is not the only money laundering provision that uses the term “proceeds.” On the contrary, the term is a staple of money laundering laws, and it is instructive that in every single one of these provisions in which the term “proceeds” is defined—and there are many—the law specifies that “proceeds” means “the total amount brought in.”

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The leading treaty on international money laundering, the United Nations Convention Against Transnational Orga nized Crime (Convention), Nov. 15, 2000, 2225 U. N. T. S. 209 (Treaty No. I–39574), which has been adopted by the United States and 146 other countries,2 is instructive. This treaty contains a provision that is very similar to § 1956(a)(1)(B)(i). Article 6.1 of the Convention obligates signatory nations to criminalize “[t]he . . . transfer of property, knowing that such property is the proceeds of crime, for the purpose of conceal ing or disguising the illicit origin of the property or of help ing any person who is involved in the commission of the pred icate offence to evade the legal consequences of his or her action.” Id., at 277 (emphasis added). The Convention de fines the term “proceeds” to mean “any property derived from or obtained, directly or indirectly, through the com mission of an offence.” Id., at 275 (Art. 2(e)). The money laundering provision of the Convention thus covers gross receipts.3 The term “proceeds” is given a similarly broad scope in the Model Money Laundering Act (Model Act). See President’s Commission on Model State Drug Laws, Eco nomic Remedies § C (1993). Section 5(a)(1) of the Model Act criminalizes transactions involving property that is “the pro ceeds of some form of unlawful activity,” and the Model Act defines “proceeds” as “property acquired or derived directly

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or indirectly from, produced through, realized through, or caused by an act or omission . . . includ[ing] any property of any kind,” § 4(a).

Fourteen States have money laundering statutes that de fine the term “proceeds,” and in every one of these laws the term is defined in a way that encompasses gross receipts. See Ariz. Rev. Stat. Ann. §§ 13–2314(N)(3) (West 2001), 13–2317(F)(4)(b) (West Supp. 2007); Ark. Code Ann. § 5–42–203(5) (2006); Cal. Health & Safety Code Ann. § 11370.9(h)(1) (West 2007); Haw. Rev. Stat. §§ 708A–2, 708A–3 (2006 Supp.); Ind. Code §§ 35–45–15–4, 35–45–15–5 (West 2004); Iowa Code §§ 706B.1(1), 706B.2 (2005); La. Stat. Ann. § 14:230(A)(4) (West 2004); Mich. Comp. Laws Ann. §§ 750.411j(f), 750.411k (West 2004); N. M. Stat. Ann. §§ 30–51–2(E), 30–51–4(A) (2004); Ohio Rev. Code Ann. §§ 1315.51(H), 1315.55 (Lexis 2006); Tex. Penal Code Ann. §§ 34.01(4), 34.02 (West Supp. 2007); Utah Code Ann. §§ 76–10–1902(9), 76–10–1903 (Lexis 2007); Va. Code Ann. §§ 18.2–246.2, 18.2–246.3 (Lexis 2004); Wash. Rev. Code §§ 9A.83.010(5), 9A.83.020 (2006). Cf. N. J. Stat. Ann. § 2C:21–25(d) (West 2005).4

This pattern of usage is revealing. It strongly suggests that when lawmakers, knowledgeable about the nature and problem of money laundering, use the term “proceeds” in a

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money laundering provision, they customarily mean for the term to reach all receipts and not just profits.5

B

There is a very good reason for this uniform pattern of usage. Money laundering provisions serve two chief ends. First, they provide deterrence by preventing drug traffick ers and other criminals who amass large quantities of cash from using these funds “to support a luxurious lifestyle” or otherwise to enjoy the fruits of their crimes. Model Act, Policy Statement, at C–105. See President’s Commission on Organized Crime, Interim Report to President and Attorney General, The Cash Connection: Organized Crime, Financial Institutions, and Money Laundering 7–8 (Oct. 1984) (herein after Interim Report); Aranson, Bouker, & Hannan, Money Laundering, 31 Am. Crim. L. Rev. 721, 722 (1994); H. R. Rep. No. 99–746, p. 16 (1986) (hereinafter H. R. Rep.). Second, they inhibit the growth of criminal enterprises by preventing

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the use of dirty money to promote the enterprise’s growth. See, e. g., 18 U. S. C. §§ 1956(a)(1)(A)(i), (a)(2)(A), and (a)(3)(A); Model Act §§ 5(a)(2), (4); N. J. Stat. Ann. § 2C:21–25(b)(1); Tex. Penal Code Ann. §§ 34.02(a)(3)–(4).

Both of these objectives are frustrated if a money launder ing statute is limited to profits. Dirty money may be used to support “a luxurious lifestyle” and to grow an illegal en terprise whenever the enterprise possesses large amounts of illegally obtained cash. And illegal enterprises may ac quire such cash while engaging in unlawful activity that is unprofitable.

Suppose, for example, that a drug cartel sends a large shipment of drugs to this country, a good part of the ship ment is intercepted, the remainder is sold, the cartel ends up with a net loss but with a large quantity of cash on its hands, and the cartel uses the cash in financial transactions that are designed to conceal the source of the cash or to promote fur ther crime. There is no plausible reason why Congress would not have wanted the money laundering statute to apply to these financial transactions. If the cartel leaders use the money to live in luxury, this provides an incentive for these individuals to stay in the business and for others to enter. If the cartel uses the money to finance future drug shipments or to expand the business, public safety is harmed.

It is certainly true that Congress, in enacting the federal money laundering statute, was primarily concerned about criminal enterprises that realize profits. A criminal opera tion that consistently loses money will not last very long and thus presents a lesser danger than a profitable operation. But narrowing a money laundering statute so that it reaches only profits produces two perverse results that Congress cannot have wanted. First, it immunizes successful criminal enterprises during those periods when they are operating temporarily in the red. Second, and more important, it in troduces pointless and difficult problems of proof. Because

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the dangers presented by money laundering are present whenever criminals have large stores of illegally derived funds on their hands, there is little reason to require proof—which may be harder to assemble than the plurality opinion acknowledges—that the funds represent profits.

C

The implausibility of a net income interpretation is highlighted in cases involving professionals and others who are hired to launder money. Those who are knowledge able about money laundering stress the importance of prosecuting these hired money launderers. See, e. g., Depts. of Treasury and Justice, The 2001 National Money Laun dering Strategy, pp. ix–x, 1–2 (Sept. 2001), online at http://www.treas.gov/press/releases/docs/ml2001.pdf; Finan cial Action Task Force on Money Laundering, 1996–1997 Re port on Money Laundering Typologies 7 (Feb. 1997), online at http://www.fatf-gafi.org/dataoecd/31/29/34043795.pdf; But terworths International Guide to Money Laundering Law and Practice 629 (T. Graham 2d ed. 2003); Ratliff, Third-Party Money Laundering: Problems of Proof and Prosecuto rial Discretion, 7 Stan. L. & Pol’y Rev. 173 (1996); Sultzer, Money Laundering: The Scope of the Problem and Attempts to Combat It, 63 Tenn. L. Rev. 143, 147–148 (1995); H. R. Rep., at 16–17.

A net income interpretation would risk hamstringing such prosecutions. To violate 18 U. S. C. § 1956(a)(1), a defendant must “kno[w] that the property involved in a financial trans action represents the proceeds of some form of unlawful ac tivity.” A professional money launderer is not likely to know (or perhaps even to care) whether the enterprise is operating in the black when the funds in question were ac quired. Therefore, under a net income interpretation, fi nancial specialists and others who are hired to launder funds would generally be beyond the reach of the statute, some thing that Congress almost certainly did not intend.

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It is revealing that the money laundering statute explicitly provides that a money launderer need only know that “the property involved in the transaction represented proceeds from some form, though not necessarily which form, of [spec ified illegal] activity.” § 1956(c)(1). Thus, the prosecution is not required to prove that a hired money launderer knew that funds provided for laundering derived from, say, drug sales as opposed to gambling. There is no reason to think that hired money launderers are more likely to know whether funds include profits than they are to know the na ture of the illegal activity from which the funds were de rived. Consequently, § 1956(c) suggests that Congress did not intend to require proof that a hired money launderer knew that funds provided for laundering included profits.

The plurality opinion dismisses these concerns with the observation that a jury may infer that a hired launderer knew that funds included profits if the launderer had a long running relationship with the entity or person providing the funds or knew that the entity or person had been involved in the illegal enterprise for a lengthy period. See ante, at 521. But what about the case where the launderer ac cepts a million dollars of drug money on a single occasion? And even if there would be legally sufficient evidence to sup port an inference of the requisite knowledge under the cir cumstances that the plurality opinion posits, the requirement of convincing a jury to find beyond a reasonable doubt that the funds included profits would pose a troublesome and (in light of the aim of the money laundering statute) pointless obstacle.

D

Even in cases in which the defendants are alleged to have been involved in the underlying criminal activity, a net in come interpretation would produce nettlesome problems that Congress cannot have wanted. These problems may be es pecially acute in the very cases that money laundering stat utes principally target, that is, cases involving large-scale

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criminal operations that continue over a substantial period of time, particularly drug cartels and other organized crime syndicates.

The federal money laundering statute was enacted in the wake of an influential report by the President’s Commission on Organized Crime that focused squarely on criminal enter prises of this type. See Interim Report 7–8 (described in S. Rep. No. 99–433, pp. 2–4 (1986) (hereinafter S. Rep.) and H. R. Rep., at 16). The Commission identified drug traf fickers and other organized criminal groups as presenting the most serious problems. See Interim Report 7. The Commission found that “narcotics traffickers, who must con ceal billions of dollars in cash from detection by the govern ment, create by far the greatest demand for money launder ing schemes” but that “numerous other types of activities typical of organized crime, such as loansharking and gam bling, also create an appreciable demand for such schemes.” Ibid. To illustrate the scope and nature of the money laun dering problem, a section of the Interim Report was devoted to case studies, most of which involved the laundering of drug money. Id., at 29–49.

As a prime example of the problem of money laundering, the report discussed the so-called “Pizza Connection” case that was prosecuted in federal court in New York City in the 1980’s. In that case, the evidence showed that the Sicilian Mafia and organized crime elements in the United States, over a period of many years, imported huge amounts of her oin into this country, sold the heroin here, accumulated mil lions of dollars of cash, and then laundered the funds by smuggling them overseas in suitcases or funneling the money through a maze of bank accounts. See id., at 31–35; United States v. Casamento, 887 F. 2d 1141, 1148–1149 (CA2 1989).

Following the issuance of the Interim Report, Congress turned its attention to the problem of money laundering, and much of the discussion focused on the need to prevent laun dering by drug and organized crime syndicates. See, e. g.,

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S. Rep., at 3 (discussing “organized crime ‘businesses’ such as gambling, prostitution, and loansharking”), 4 (“Money laundering is a crucial financial underpinning of organized crime and narcotics trafficking” (internal quotation marks omitted)); Hearing on Money Laundering Legislation before the Senate Committee on the Judiciary, 99th Cong., 1st Sess., 1 (1985) (statement of Chairman Thurmond), 29 (statement of Sen. Biden), 30 (statement of Sen. DeConcini), 31 (state ment of Sen. D’Amato), 53 (statement of Assistant Attorney General Trott).

In light of these concerns, it is most unlikely that Congress meant to enact a money laundering statute that would pre sent daunting obstacles in the very sort of cases that had been identified as presenting the most pressing problems, that is, cases, like the “Pizza Connection” case, in which law enforcement intercepts cash or wire transfers of funds de rived from drug sales or other unlawful activity that oc curred over a period of time. The plurality opinion’s inter pretation of the term “proceeds,” however, would often produce such problems. Tracing funds back to particular drug sales and proving that these sales were profitable will often prove impossible. See United States v. Bajakajian, 524 U. S. 321, 351–352 (1998) (Kennedy, J., dissenting). In deed, it will often be hard even to establish with any preci sion the period of time during which the drug sales occurred. But assuming that the Government can prove roughly when the funds were acquired, the next hurdle would be to show that the drug ring had net income during the time when the funds were acquired.

“Net income” means “[t]he excess of revenues over all re lated expenses for a given period.” R. Estes, Dictionary of Accounting 88 (1981) (emphasis deleted). There are no gen erally accepted accounting principles for determining the net income of illegal enterprises, and therefore, in order to apply a net income interpretation, special accounting rules would have to be developed.

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In the drug-money cases that I have been discussing, the courts would have to decide whether the drug syndicate’s net income should be calculated on an annual, quarterly, or some other basis. In addition, the courts would be forced to devise rules for determining the scope of the enterprise for which the net income calculation must be performed. Suppose, for example, that there were connections of an un certain nature or degree between drug operations in differ ent cities or countries. Rules would be needed to determine whether affiliated criminal groups should be regarded as one enterprise or several. And proof regarding the connections between such operations would often be very difficult to ob tain. Criminal enterprises do not have papers of incorpora tion, partnership agreements, or (in most instances) other documents establishing precise business relationships.

Rules would also be needed in order to determine whether particular illegal expenditures should be considered as ex penses. In the “Pizza Connection” case, the Sicilian Mafia used its income for such things as the murder of magistrates, police officers, witnesses, and rivals. See, e. g., Casamento, supra, at 1154–1156; United States v. Gambino, 809 F. Supp. 1061, 1065–1068 (SDNY 1992). Are these expenditures sim ply a cost of engaging in the drug trade? Are they busi ness expenses?

If a net income interpretation were taken to its logical conclusion, it presumably would be necessary as well to work out rules for the depreciation of instrumentalities of crime that must occasionally be replaced due to the efforts of law enforcement. But it seems quite implausible that Congress wanted courts or juries in money laundering cases to grapple with questions such as the useful life of, say, a drug process ing plant or laboratory or the airplanes and boats that are used to smuggle drugs. And assuming that the accounting issues can ultimately be resolved by the courts, there would remain serious problems of proof. Illegal enterprises gener

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ally do not keep books and records like legitimate busi nesses do.

It is tempting to dismiss many of the problems noted above on the ground that “everyone knows” that drug car tels, organized crime syndicates, and the like make a profit. But such groups may not operate in the black at all times, and in any event, if net income is an element of the money laundering offense, the prosecution must prove net income beyond a reasonable doubt. The prosecution cannot simply ask the jury to take notice of the fact that these groups are profitable.

My point in citing the accounting and proof problems that would be produced by a net income interpretation is not that the “ ‘receipts’ ” interpretation is preferable because “it is easier to prosecute,” ante, at 519 (plurality opinion), but that creating these obstacles would serve no discernible purpose. Even if a drug or gambling ring was temporarily operating in the red during a particular period, the laundering of money acquired during that time would present the same dangers as the laundering of money acquired during times of profit. It is therefore implausible that Congress wanted to throw up such pointless obstacles.

The plurality opinion attempts to minimize all these prob lems by stating that “to establish the proceeds element under the ‘profits’ interpretation, the prosecution needs to show only that a single instance of specified unlawful activity was profitable and gave rise to the money involved in a charged transaction.” Ante, at 520. This suggestion ig nores both the language of the money laundering statute, which makes no reference to an “instance” of unlawful activ ity, and the realities of money laundering prosecutions. The prototypical money laundering case is not a case in which a defendant engages in a single, discrete criminal act and then launders the money derived from that act—for example, a case in which a “felon . . . uses . . . stolen money to pay for the rented getaway car.” Ante, at 516. Rather, the proto

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typical case involves numerous criminal acts that occur over a period of time and the accumulation of funds from all these acts prior to laundering—for example, the organized crime syndicate or drug cartel that amasses large sums before en gaging in a laundering transaction.

Take, for example, a case in which a defendant is charged with doing what was done in the “Pizza Connection” case—transferring millions of dollars of drug money overseas, knowing that the funds represent the proceeds of drug traf ficking (“some form of unlawful activity”) and that the trans fer was designed to conceal the origin of the funds. See 18 U. S. C. § 1956(a)(2)(B). In such a case, it is unrealistic to think that individual dollars can be traced back to individual drug sales—or that Congress wanted to require such tracing.

Although the plurality opinion begins by touting the “sin gle instance” theory as a cure for the accounting and proof problems that a “profits” interpretation produces, the plural ity’s application of the “single instance” theory to the case at hand shows that this theory will not work. In this case, the “unlawful activity” that produced the funds at issue in the substantive money laundering counts was the operation of the Santos lottery,6 and it is hardly apparent what consti tutes a “single instance” of running a gambling business. Did each lottery drawing represent a separate “instance”? Each wager? And how long does each gambling “instance” last? A day? A week? A month?

When the plurality opinion addresses these questions, it turns out that “a single instance” means all instances that are charged, i. e., it means that the Government had to show that receipts exceeded costs during the time the defendant allegedly conducted, financed, etc., the gambling operation. See ante, at 520–521, n. 7. Here, since the Indictment al leged that the Santos lottery continued for more than 6 years (“[b]eginning in or about January 1989 and continuing to in

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or about December 1994, the exact dates being unknown to the Grand Jury”),7 the plurality would apparently compel the Government to prove that the lottery was profitable over this entire period.

If this is where the “single instance” theory leads, the theory plainly does not solve the accounting and proof prob lems we have noted. And the plurality’s suggestion that the Government had to show that the gambling operation was profitable for this entire period leads to preposterous results. Suppose that the lottery was profitable for the first five years and, at the end of each year, respondents laundered funds derived from the business. Suppose that in the sixth year the business incurred heavy losses—losses so heavy that they wiped out all of the profits from the first five years. According to the plurality, if respondents were found to have operated the lottery during the entire 6-year period, then the financial transactions that occurred at the end of years one, two, three, four, and five would not violate the money laundering statute, even though an accounting done at those times would have come to the conclusion that the funds in cluded profits. That result makes no sense.

Whenever a money laundering indictment charges that the laundered funds derived from an “unlawful activity” that comprehends numerous acts that occurred over a consider able period of time—and that is precisely the situation in many of the types of cases that the money laundering statute principally targeted—the plurality opinion’s interpretation will produce difficulties. I have already discussed drug and gambling cases, and similar problems will arise in cases in which the unlawful activity is a form of fraud. For example, the unlawful activity in mail fraud (18 U. S. C. § 1341) is the scheme to defraud, not the individual mailings carried out in furtherance of the scheme. See Neder v. United States, 527 U. S. 1, 19 (1999); United States v. Mankarious, 151 F. 3d 694

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(CA7 1998). In such a case, what will constitute the “single instance of unlawful activity”? Will each mailing be a sepa rate “instance”? The same problem arises with other fraud predicates, including wire fraud (§ 1343), see, e. g., United States v. Zvi, 168 F. 3d 49 (CA2 1999), and financial institu tion fraud (§ 1344), see, e. g., United States v. Farr, 69 F. 3d 545, 1995 WL 638249 (CA9 1995) (unpublished).

The plurality opinion suggests that the application of a profits interpretation will be easy in cases in which the fi nancial transactions are payments of “expenses.” Ante, at 516–517. But it may be no small matter to determine whether particular payments are for “expenses.” When the manager of a gambling operation distributes cash to those who work in the operation, the manager may be paying them the rough equivalent of a salary; that is, the recipients may expect to receive a certain amount for their services whether or not the operation is profitable. On the other hand, those who work in the operation may have the expectation of re ceiving a certain percentage of the gross revenue (perhaps even in addition to a salary), in which case their distribution may include profits. Such was the case in Santos’ lottery, where the runners were paid a percentage of gross revenue. See Indictment 5; 16 Tr. 1399 (Oct. 9, 1997).

The plurality opinion cites 18 U. S. C. § 1963(a) and 21 U. S. C. § 853(a) for the proposition that Congress has “else where” imposed the burden of proving that illegally obtained funds represent profits, but the plurality opinion’s examples are inapposite. Ante, at 519–520. Neither of these provi sions, however, requires a determination of net income. Both provisions permit a fine in the amount of “not more than twice the gross profits or other proceeds.” 18 U. S. C. § 1963(a). Thus, the term “proceeds” as used in these provi sions is not limited to profits.8

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For all these reasons, I am convinced that the term “pro ceeds” in the money laundering statute means gross receipts, not net income. And contrary to the approach taken by Justice Stevens, I do not see how the meaning of the term “proceeds” can vary depending on the nature of the illegal activity that produced the laundered funds.

II A

It is apparent that a chief reason for interpreting the term “proceeds” to mean net income in all money laundering cases (the approach taken in the plurality opinion) or in some money laundering cases (the approach taken by Justice Stevens) is the desire to avoid a “merger” problem in gam bling cases—that is, to avoid an interpretation that would mean that every violation of § 1955 (conducting an illegal gambling business) would also constitute a violation of the money laundering statute, which carries a much higher maxi mum penalty (20 as opposed to 5 years’ imprisonment). This concern is misplaced and provides no justification for hobbling a statute that applies to more than 250 predicate offenses and not just running an illegal gambling business.

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First, the so-called merger problem is fundamentally a sentencing problem, and the proper remedy is a sentencing remedy. While it is true that the money laundering statute has a higher maximum sentence than the gambling business statute, neither statute has a mandatory minimum. Thus, these statutes do not require a judge to increase a defend ant’s sentence simply because the defendant was convicted of money laundering as well as running a gambling business. When the respondents were convicted, their money launder ing convictions resulted in higher sentences only because of the money laundering Sentencing Guideline, United States Sentencing Commission, Guidelines Manual § 2S1.1 (Nov. 1997) (USSG), which, in the pre-Booker9 era, was mandatory. I agree with Justice Breyer, ante, at 530–531 (dissenting opinion), that if a defendant is convicted of money laundering for doing no more than is required for a violation of 18 U. S. C. § 1955, the defendant’s sentence should be no higher than it would have been if the defendant had violated only that latter provision. Insofar as the Guidelines previously required—and now advise in favor of—a stiffer sentence, the obvious remedy is an amendment of the money laundering Guideline. And of course, now that the Guidelines are no longer mandatory, a sentencing judge could impose the sen tence called for by the Guideline that applies to the gambling business provision, see USSG § 2E3.1(a)(1) (Nov. 2007), or an entirely different sentence.

Second, the merger problem that the plurality opinion and Justice Stevens seek to avoid assumes the correctness of the interpretation of the promotion prong of the money laun dering statute that the Seventh Circuit adopted in Santos’ direct appeal, i. e., that a defendant “promotes” an illegal gambling business by doing those things, such as paying em ployees and winning bettors, that are needed merely to keep

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the business running. As Santos’ brief puts it, the merger problem arises when the interpretation of “proceeds” as gross receipts is “[c]ombined with the Government’s broad application of the ‘promotion’ prong of the money laundering statute.” Brief for Respondent Santos 6. But the meaning of the element of promotion is not before us in this case, and it would not make sense to allow our interpretation of “proceeds” to be dictated by an unreviewed interpretation of another statutory element.

Third, even if there is a merger problem, it occurs in only a subset of money laundering cases. The money laundering statute reaches financial transactions that are intended to promote more than 250 other crimes, ante, at 516 (plurality opinion), as well as transactions that are intended to conceal or disguise the nature, location, source, ownership, or control of illegally obtained funds. See 18 U. S. C. § 1956(a). The meaning of the term “proceeds” cannot vary from one money laundering case to the next, and the plurality opinion and Justice Stevens inappropriately allow the interpretation of that term to be controlled by a problem that may arise in only a subset of cases.

B

The plurality opinion defends its interpretation by invok ing the rule of lenity, but the rule of lenity does not require us to put aside the usual tools of statutory interpretation or to adopt the narrowest possible dictionary definition of the terms in a criminal statute. On the contrary, “[b]ecause the meaning of language is inherently contextual, we have de clined to deem a statute ‘ambiguous’ for purposes of lenity merely because it was possible to articulate a construction more narrow than that urged by the Government.” Moskal v. United States, 498 U. S. 103, 108 (1990) (citing McElroy v. United States, 455 U. S. 642, 657–658 (1982)). As I have explained above, the meaning of “proceeds” in the money laundering statute emerges with reasonable clarity when

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the term is viewed in context, making the rule of lenity inapplicable.

* * *

For these reasons, I would reverse the decision of the Court of Appeals, and I therefore respectfully dissent.