Court Opinion

ID: 9599158
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:15:24.209735+00
Date Added: 2024-06-11T18:01:44.200436
License: Public Domain

CLAY, Circuit Judge,
concurring in the judgment.
According to the majority, Kratt’s appeal requires us to determine whether the term “proceeds” in 18 U.S.C. § 1957(f)(2) means “profits” or “gross receipts.” The majority insists that resolving this question is necessary because: “If ‘proceeds’ means profits, as Kratt argues, the gov*566ernment has a sufficieney-of-the-evidenee problem, because it never proved that the money Kratt deposited into, and withdrew from, his Bancorp South account represented the profits, as opposed to the gross receipts, of his bank fraud or false statements. If ‘proceeds’ means gross receipts, as the government argues, Kratt does not have a leg to stand on in challenging these convictions on sufficiency grounds.” I disagree. Notwithstanding the majority’s unsupported suggestion to the contrary, it is evident that Kratt’s claims would fail even if the term “proceeds” means “profits.”
As the government properly points out, the money that Bancorp South placed in an account for Kratt and that Kratt withdrew from that account constitutes profits regardless of whether he used those illegally obtained funds to pay off other loans. As the majority explains, Kratt obtained this loan from Bancorp South to refinance another loan related to a Cessna aircraft. There is no question that Kratt’s Cessna loan was not a critical part of his criminal activity, it was a personal debt. On any reading, the Supreme Court’s decision in United States v. Santos, — U.S.-, 128 S.Ct. 2020, 170 L.Ed.2d 912 (2008), does not suggest — and cannot possibly be read to suggest — that the proceeds from an illegal act must be greater than the total of the defendant’s outstanding personal debts to constitute “profits.” In Santos, the Court considered whether the receipts of an illegal lottery that were being funneled back into the operation were in fact “proceeds” for purposes of § 1956. In this case, however, Kratt undoubtedly did not use of the proceeds from his illegal conduct to help finance his illegal conduct. Despite Kratt’s contention, and notwithstanding the majority’s acceptance of that suggestion, this case is nothing like Santos, and presents none of the legal nuances at issue there. Properly understood, Kratt’s Cessna loan was the motivation for his illegal activity, not the means by which he carried it out. The fact that Kratt had debts and other financial obligations that he intended to pay off with his misbegotten loan is irrelevant. To read Santos more broadly would put prosecutors in the impossible position of having to prove that defendants were not using the proceeds of their criminal conduct to pay off their mortgages, or student loans, or car insurance, etc.
The simple fact is that Kratt did not use the proceeds of his fraudulent scheme to promote the illegal operation that generated those funds. Consequently, even if we accept arguendo Kratt’s arguments, his sufficiency-of-the-evidence claim would still fail. Even assuming that Santos applies, and on any interpretation of Santos, the proceeds of Kratt’s loan were profits that undoubtedly exceeded the $10,000 statutory minimum set forth in 18 U.S.C. § 1957(a). Because Kratt’s claim fails in any event, we need not consider whether the term “proceeds” has the same meaning in § 1957 cases as the Supreme Court held it does in certain § 1956 cases, nor do we need to determine the proper scope of the Court’s decision in Santos. Resolving these questions is not necessary to our disposition of this case.1
*567I therefore concur in the judgment but not in the opinion offered by the majority.

. The majority seems to acknowledge that the proceeds of a fraudulently obtained loan are "profits,” not merely receipts, even if the defendant uses the proceeds to pay down his or her personal debt. Nevertheless, the majority insists that we must address these legal questions because some of the underlying assumptions of the government’s "alternative theory of affirmance” are flawed and because the majority can "envision” other possible definitions of "profits” in this context. The majority’s reasoning is flawed on both accounts. Indeed, the whole point of accepting Kratt’s argument arguendo is that we' need not resolve whether proceeds means gross revenues or profits in this context, so the majority’s suggestion that we "have held that proceeds means gross revenues, not profits, so there is no basis for reaching the Government’s alter*567native theory of affirmance" is utterly flawed. And although the alternative definitions offered by the majority are interesting suggestions, Kratt does not make any of these arguments. On the contrary, Kratt argues only that "[t]he money received as a result of the named offenses were not 'profits' of a criminal enterprise, but rather funds which were used for the specific purpose of refinancing the airplane.” Appellant Br. at 21. Nowhere does Kratt ever suggest that the receipts of his Bancorp South loan are not profits because they were secured with offsetting collateral, or offer anything resembling the majority's second alternative definition of "profits." Because the majority seems to acknowledge that the fourth definition is unacceptable, and that is the only definition offered by Kratt, I do not see any reason to reach any further. Because Kratt failed to make the argument that follows from the second definition "envision[ed]” by the majority, I see no reason to make it for him simply to manufacture a justification for reaching an issue of first impression in this circuit. The more prudent course would be to wait to consider such issues in a case where they are properly raised by the parties, especially in this context where there may be nuances to these types of financial transactions that have not been discussed by the parties. Simply because we can "envision" alternative definitions does not mean that we need to address them.