United States v. Mento
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United States v. Mento, (1st Cir. 1993).
Opinion
USCA1 Opinion
January 13, 1993
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
_________________________
No. 91-1363
UNITED STATES OF AMERICA,
Appellee,
v.
DANIEL F. AVERSA,
Defendant, Appellant.
_________________________
No. 91-1364
UNITED STATES OF AMERICA,
Appellee,
v.
VINCENT MENTO,
Defendant, Appellant.
_________________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Martin F. Loughlin, Senior U.S. District Judge]
__________________________
_________________________
No. 91-1574
UNITED STATES OF AMERICA,
Appellee,
v.
WILLIAM J. DONOVAN,
Defendant, Appellant.
_________________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Shane Devine, U.S. District Judge]
___________________
_________________________
Before
Breyer, Chief Judge,
___________
Coffin and Bownes, Senior Circuit Judges,
_____________________
Torruella, Selya, Cyr and Boudin, Circuit Judges.
______________
_________________________
Robert V. Johnson II, for appellant Aversa.
____________________
David A. Ross, with whom Eaton, Solms, McIninch & Phillips
_____________ __________________________________
was on brief, for appellant Mento.
Jonathan R. Saxe, with whom Twomey & Sisti Law Offices was
________________ ___________________________
on brief, for appellant Donovan.
Peter E. Papps, First Assistant United States Attorney, with
______________
whom Jeffrey R. Howard, United States Attorney, and Richard A.
__________________ __________
Friedman, Attorney, Department of Justice, were on brief, for the
________
United States.
_________________________
_________________________
OPINIONS EN BANC
_________________________
SELYA, Circuit Judge. The government charged each of
SELYA, Circuit Judge.
______________
these appellants with criminal violations of the Bank Records and
Foreign Transactions Act (BRFTA), Pub. L. No. 91-508, 84 Stat.
1114 (1970) (codified as amended in various sections of 12
U.S.C., 15 U.S.C., and 31 U.S.C.). Appellant Donovan was charged
with, and convicted of, failure to file currency transaction
reports (CTRs). See 31 U.S.C. 5313 (1988). Appellants Aversa
___
and Mento were charged with, and convicted of, structuring bank
deposits to avoid triggering currency transaction reporting
requirements. See 31 U.S.C. 5324 (1988). In each case, the
___
underlying legal requirement comprises part of Subchapter II of
the BRFTA. Subchapter II's criminal penalty provision, 31 U.S.C.
5322(a), proscribes only "willful" violations of the
subchapter's provisions.
A panel of this court initially heard Donovan's appeal
and decided it adversely to him. We subsequently withdrew the
panel opinion and granted rehearing en banc, consolidating the
appeal with appeals involving Aversa and Mento, so that we might
settle the meaning of the term "willful" as used in Subchapter
II.1 The en banc court now affirms Donovan's conviction while
vacating the other convictions and remanding those cases for
further proceedings.
____________________
1The government filed cross-appeals challenging the
relatively mild sentences imposed on Mento and Aversa. In view
of our disposition of the issue before the en banc court, the
cross-appeals (Nos. 91-1615 and 91-1616) are moot. They will,
therefore, be dismissed without prejudice.
3
I. BACKGROUND
I. BACKGROUND
These cases originated in different ways and traveled
different paths to reach our doorstep. We sketch the background
and then frame the common issue that all three appeals present.
A. Donovan.
A. Donovan.
__________
Donovan, the president and chief executive officer of
Atlantic Trust Company, a Boston-based financial institution,
moonlighted as a real estate developer. A friend, Dr. Edward
Saba, gave Donovan substantial sums of cash to deposit at
Atlantic Trust for eventual investment in a New Hampshire housing
subdivision. Eschewing Atlantic Trust's standard protocol for
routing deposits through tellers, Donovan personally deposited
Saba's money in five chunks of $30,000, $92,000, $30,000,
$55,000, and $30,000, respectively. Donovan made the deposits at
various times between March 13, 1987 and April 21, 1987.
Although Donovan was the bank's legal compliance officer a
status which presumptively suggests his familiarity with banking
laws he did not prepare CTRs for any of these deposits.
Indeed, Donovan fended off his subordinates' concerns about the
unorthodox way he was handling Saba's cash.
At trial, Donovan admitted that he was aware of the law
Free access — add to your briefcase to read the full text and ask questions with AI
USCA1 Opinion
January 13, 1993
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
_________________________
No. 91-1363
UNITED STATES OF AMERICA,
Appellee,
v.
DANIEL F. AVERSA,
Defendant, Appellant.
_________________________
No. 91-1364
UNITED STATES OF AMERICA,
Appellee,
v.
VINCENT MENTO,
Defendant, Appellant.
_________________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Martin F. Loughlin, Senior U.S. District Judge]
__________________________
_________________________
No. 91-1574
UNITED STATES OF AMERICA,
Appellee,
v.
WILLIAM J. DONOVAN,
Defendant, Appellant.
_________________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Shane Devine, U.S. District Judge]
___________________
_________________________
Before
Breyer, Chief Judge,
___________
Coffin and Bownes, Senior Circuit Judges,
_____________________
Torruella, Selya, Cyr and Boudin, Circuit Judges.
______________
_________________________
Robert V. Johnson II, for appellant Aversa.
____________________
David A. Ross, with whom Eaton, Solms, McIninch & Phillips
_____________ __________________________________
was on brief, for appellant Mento.
Jonathan R. Saxe, with whom Twomey & Sisti Law Offices was
________________ ___________________________
on brief, for appellant Donovan.
Peter E. Papps, First Assistant United States Attorney, with
______________
whom Jeffrey R. Howard, United States Attorney, and Richard A.
__________________ __________
Friedman, Attorney, Department of Justice, were on brief, for the
________
United States.
_________________________
_________________________
OPINIONS EN BANC
_________________________
SELYA, Circuit Judge. The government charged each of
SELYA, Circuit Judge.
______________
these appellants with criminal violations of the Bank Records and
Foreign Transactions Act (BRFTA), Pub. L. No. 91-508, 84 Stat.
1114 (1970) (codified as amended in various sections of 12
U.S.C., 15 U.S.C., and 31 U.S.C.). Appellant Donovan was charged
with, and convicted of, failure to file currency transaction
reports (CTRs). See 31 U.S.C. 5313 (1988). Appellants Aversa
___
and Mento were charged with, and convicted of, structuring bank
deposits to avoid triggering currency transaction reporting
requirements. See 31 U.S.C. 5324 (1988). In each case, the
___
underlying legal requirement comprises part of Subchapter II of
the BRFTA. Subchapter II's criminal penalty provision, 31 U.S.C.
5322(a), proscribes only "willful" violations of the
subchapter's provisions.
A panel of this court initially heard Donovan's appeal
and decided it adversely to him. We subsequently withdrew the
panel opinion and granted rehearing en banc, consolidating the
appeal with appeals involving Aversa and Mento, so that we might
settle the meaning of the term "willful" as used in Subchapter
II.1 The en banc court now affirms Donovan's conviction while
vacating the other convictions and remanding those cases for
further proceedings.
____________________
1The government filed cross-appeals challenging the
relatively mild sentences imposed on Mento and Aversa. In view
of our disposition of the issue before the en banc court, the
cross-appeals (Nos. 91-1615 and 91-1616) are moot. They will,
therefore, be dismissed without prejudice.
3
I. BACKGROUND
I. BACKGROUND
These cases originated in different ways and traveled
different paths to reach our doorstep. We sketch the background
and then frame the common issue that all three appeals present.
A. Donovan.
A. Donovan.
__________
Donovan, the president and chief executive officer of
Atlantic Trust Company, a Boston-based financial institution,
moonlighted as a real estate developer. A friend, Dr. Edward
Saba, gave Donovan substantial sums of cash to deposit at
Atlantic Trust for eventual investment in a New Hampshire housing
subdivision. Eschewing Atlantic Trust's standard protocol for
routing deposits through tellers, Donovan personally deposited
Saba's money in five chunks of $30,000, $92,000, $30,000,
$55,000, and $30,000, respectively. Donovan made the deposits at
various times between March 13, 1987 and April 21, 1987.
Although Donovan was the bank's legal compliance officer a
status which presumptively suggests his familiarity with banking
laws he did not prepare CTRs for any of these deposits.
Indeed, Donovan fended off his subordinates' concerns about the
unorthodox way he was handling Saba's cash.
At trial, Donovan admitted that he was aware of the law
requiring him to file CTRs for cash deposits of $10,000 or more,
but insisted that he mistakenly believed Saba's deposits came
within one of the law's exemptions.2 The district court
____________________
2"Deposits or withdrawals of currency from an existing
account by an established depositor who . . . operates a retail
type of business" are exempted from the reporting requirements
4
instructed the jury that it was the government's burden to prove
Donovan "knowingly" and "willfully" failed to file CTRs. The
court twice explained these elements (once during the main charge
and once in answering an inquiry during jury deliberations):
An act or a failure to act is knowingly
done if it is done voluntarily and
intentionally and not because of mistake or
accident or other innocent reason. An act or
a failure to act is done willfully if done
voluntarily and intentionally and with the
specific intent to do something the law
forbids, that is to say with bad purpose,
either to disobey or disregard the law.
Despite Donovan's importuning, the district court refused to tell
the jury that any mistake by Donovan, regardless of its nature,
would necessitate acquittal. The jury found Donovan guilty.
B. Aversa and Mento.
B. Aversa and Mento.
___________________
Aversa and Mento were partners in a real estate
business. In January 1989, they sold a parcel of land, splitting
the proceeds. At the time, Aversa's marriage was foundering. In
order to conceal his share of the profits from his wife, Aversa
asked Mento to deposit the receipts in Mento's personal bank
account rather than in the partners' joint business account.
Mento agreed. Aversa signed a statement acknowledging his
responsibility for one-half of the funds to insulate Mento from
potentially adverse tax consequences.
Mento and Aversa knew that Mento's bank was legally
required to file CTRs for all deposits of $10,000 or more.
____________________
under 31 C.F.R. 103.22(b)(2)(i) (1987). Donovan does not
contend that Saba was an exempt customer under this, or any
other, section of the regulations.
5
Fearing that the resultant paper trail might obviate their
efforts to hide the cash from Mrs. Aversa, the defendants made
serial deposits and withdrawals in sums under $10,000. Although
both men admitted that they knew about the CTR requirement, they
claimed to be unaware that structuring bank transactions, even if
designed to avoid causing the bank to file CTRs, was itself a
crime.
Following the return of indictments, the government
moved in limine to prevent the introduction of evidence
__ ______
supporting the defendants' mistake-of-law theory. Judge Loughlin
granted the motion. Aversa then pled guilty to structuring, but
did so conditionally, see Fed. R. Crim. P. 11(a)(2), reserving
___
his mistake-of-law defense for appeal. Mento opted for trial.
At the trial, the district court, over timely objection,
instructed the jury that mistake of law was not a defense to
structuring. The jury found Mento guilty.
C. The En Banc Issue.
C. The En Banc Issue.
____________________
Although these appellants breached different regulatory
provisions of Subchapter II, each was convicted under the
subchapter's criminal penalty provision, 31 U.S.C. 5322, and
each raised a mistake-of-law defense. We convened the en banc
court specifically to examine the efficacy of such defenses in
the CTR and antistructuring contexts. At bottom, this task
requires us to elucidate the state of mind that Congress required
when it limited such violations to willful misconduct.
II. DISCUSSION
II. DISCUSSION
6
We begin with an analysis of the governing statute,
exploring its interstices and explicating its meaning. We then
proceed to tackle the knotty mens rea questions that confront us.
____ ___
A. The Statutory Scheme.
A. The Statutory Scheme.
_______________________
In 1970, concerned about the ease with which criminals,
particularly drug traffickers, were able to exchange ill-gotten
profits for "clean" money, Congress enacted the BRFTA. Among
other things, Subchapter II delegated to the Secretary of the
Treasury (the Secretary) the power to require banks and
individuals to file CTRs with the Internal Revenue Service when
cash changed hands.3 See, e.g., 31 U.S.C. 5313. The
___ ____
Secretary did not exercise his delegated power in respect to
individuals, but required banks to file CTRs when transactions
involved $10,000 or more. See 31 C.F.R. 103.22(a)(1) (1989).
___
Although Subchapter II's transaction report requirement
expanded the armamentarium of federal law enforcement agents, it
was too easily circumvented. Individuals who wished to avoid a
paper trail for any reason could simply segment large sums of
money into several transactions of less than $10,000. In an
apparent effort to plug this loophole, Congress amended
____________________
3Subchapter II has a number of other regulatory provisions,
including reporting requirements for importing and exporting
currency and for foreign currency transactions. See 31 U.S.C.
___
5313-17. Congress did not require that an individual be guilty
of some related infraction (say, drug trafficking) before he
could run afoul of these currency regulations. Rather, Congress
provided that individuals who violate the currency regulations
while involved in some other criminal activity are eligible for
harsher penalties than those who violate the currency regulations
alone. Compare 31 U.S.C. 5322(a) with 31 U.S.C. 5322(b).
_______ ____
7
Subchapter II in 1986. Pub. L. No. 99-570, 100 Stat. 3207
(1986), codified at 31 U.S.C. 5324. The new antistructuring
________ __
provision limited an individual's ability to dodge the CTR
requirement.4 At the time, Congress considered, but decided not
to alter, section 5322's criminal provisions. Thus, section
5322, which criminalizes conduct undertaken by a "person
willfully violating [subchapter II or a regulation promulgated
under Subchapter II]," applies to the antistructuring section as
well as to the balance of Subchapter II. Although appellants
stand convicted of different offenses Donovan was found guilty
____________________
4The amendment read in pertinent part:
No person shall for the purpose of evading
the reporting requirements of section 5313(a)
with respect to such transaction --
. . .
(3) structure or assist in
structuring, or attempt to
structure or assist in structuring,
any transaction with one or more
domestic financial institutions.
31 U.S.C. 5324. The regulations implementing the statute
explained that:
a person structures a transaction if that person,
acting alone, or in conjunction with, or on behalf of,
other persons, conducts or attempts to conduct one or
more transactions in currency, in any amount, at one or
more financial institutions, on one or more days, in
any manner, for the purpose of evading the reporting
requirements . . . . "In any manner" includes, but is
not limited to, the breaking down of a single sum of
currency exceeding $10,000 into smaller sums, including
sums at or below $10,000, or the conduct of a
transaction, or series of currency transactions,
including transactions at or below $10,000.
31 C.F.R. 103.11(n) (1989).
8
of violating the CTR provision while the other two appellants
were convicted of structuring infractions they all argue that
section 5322's willfulness requirement means that, to be found
guilty, they must have intentionally traversed a known legal
duty. Consequently, they press a subjective standard of intent
and asseverate that mistake of law necessarily constitutes a
complete defense to the charges laid against them.
The government takes a diametrically opposite view. It
contends that, because Congress made no express provision to the
contrary, ignorance of the law cannot serve as a defense to the
instant charges. See generally United States v. Dotterweich, 320
___ _________ _____________ ___________
U.S. 277, 284 (1943) (holding that consciousness of wrongdoing is
not necessary for conviction). The government's position derives
some support from an array of appellate cases which have
disallowed mistake-of-law defenses in the transactional
structuring milieu. See, e.g., United States v. Ratzlaf, 976
___ ____ _____________ _______
F.2d 1280, 1283 (9th Cir. 1992); United States v. Caming, 968
_____________ ______
F.2d 232, 238-39 (2d Cir.), cert. denied, 113 S. Ct. 416 (1992);
_____ ______
United States v. Gibbons, 968 F.2d 639, 644 (8th Cir. 1992);
______________ _______
United States v. Rogers, 962 F.2d 342, 344 (4th Cir. 1992);
______________ ______
United States v. Brown, 954 F.2d 1563, 1568 (11th Cir.), cert.
______________ _____ _____
denied, 113 S. Ct. 284 (1992); United States v. Dashney, 937 F.2d
______ _____________ _______
532, 538 (10th Cir.), cert. denied, 112 S. Ct. 402 (1991); United
_____ ______ ______
States v. Scanio, 900 F.2d 485, 490 (2d Cir. 1990). For the
______ ______
reasons discussed below, we think these cases read section 5322
in an overly malleable manner.
9
B. Mens Rea: CTR Violations.
B. Mens Rea: CTR Violations.
____________________________
We start by analyzing the mens rea required with
____ ___
respect to CTR violations. Under the criminal penalty provision,
31 U.S.C. 5322, violations, to be culpable, must be "willful."
The Court has long recognized that willful "is a word of many
meanings, its construction often being influenced by its
context." Spies v. United States, 317 U.S. 492, 497 (1943). See
_____ _____________ ___
generally Note, An Analysis of the Term "Willful" in Federal
_________ ________________________________________________
Criminal Statutes, 51 Notre Dame L. Rev. 786, 786-87 (1976).
_________________
Courts have coalesced around four definitions of
willfulness. The first, which is most closely aligned with the
government's theory here, simply equates "willful" with "knowing"
(i.e., so long as the defendant is aware of his conduct and the
____
nature of his circumstances, no more is necessary). See, e.g.,
___ ____
United States v. McCalvin, 608 F.2d 1167, 1171 (8th Cir. 1979);
_____________ ________
see also American Law Institute, Model Penal Code 2.02(8)
___ ____ _________________
(1985).5 The second definition of willfulness, which is most
____________________
5An exchange between Judge Learned Hand and the reporter for
the Model Penal Code, Professor Herbert Wechsler, indicates that
the Code's principal architects thought that the term "willfully"
added very little to statutory meaning:
Judge Hand: [Willfully is] an awful word!
Judge Hand
It is one of the most troublesome words in a
statute that I know. If I were to have the
index purged, "wilful" would lead all the
rest in spite of its being at the end of the
alphabet.
Professor Wechsler: I agree with you Judge
Professor Wechsler
Hand, and I promise you unequivocally that
the word will never be used in the definition
of any offense in the Code. But because it
is such a dreadful word and so common in the
10
closely aligned with appellants' position, has its roots in tax-
crime cases. This approach equates willfulness with the
violation of a known legal duty. See, e.g., Cheek v. United
___ ____ _____ ______
States, 111 S. Ct. 604, 610 (1991) (discussed infra Part II(D)).
______ _____
To our knowledge, no court of appeals has applied either of these
first two definitions across the board in connection with the
entire array of Subchapter II violations.
Several courts, however, have taken a hybrid approach
to the issue of willfulness in the purlieus of Subchapter II.
This approach is marked by its protean quality. Depending on the
language of each particular regulatory provision, the word
"willfully" as used in section 5322 takes on a variety of
meanings, allowing mistake of law as a defense to certain crimes
and not to others. This viewpoint is best typified by Scanio and
______
its progeny. See Scanio, 900 F.2d at 490 (permitting mistake-of-
___ ______
law defense as to some currency-related crimes while prohibiting
such a defense vis-a-vis other currency-related crimes); see also
___ ____
cases collected supra at p. 9.
_____
We think that all three of these definitions create
needless problems. The government's theory undervalues the
statute's language by reading willfulness as if it were simply a
____________________
regulatory statutes, it seemed to me useful
to superimpose some norm of meaning on it.
American Law Institute, Model Penal Code 2.20, at 249 n.47
_________________
(1985).
11
synonym for general intent.6 In contrast, appellants' theory,
if applied across the board, would allow all mistakes of law, no
matter how unreasonable, to serve as bucklers against
prosecution, and, in the bargain, would vitiate the general
principle that "deliberate ignorance and positive knowledge are
equally culpable." United States v. Jewell, 532 F.2d 697, 700
_____________ ______
(9th Cir.), cert. denied, 426 U.S. 951 (1976). Last, while
_____ ______
Scanio and its progeny adopt a flexible definition of
______
willfulness, they neither speak to the mens rea for CTR
____ ___
violations nor answer the critical question of how differing
definitions can attach to a single usage of an operative term in
a single statutory section.
For our part, we take yet a fourth tack a tack
adumbrated by the course we set in United States v. Bank of New
_____________ ____________
England, 821 F.2d 844 (1st Cir.), cert. denied, 484 U.S. 943
_______ _____ ______
(1987). In that case, we plotted the intersection between
section 5322's willfulness criterion and section 5313's CTR
requirements. See id. at 854-59. Bank of New England had failed
___ ___
to prepare CTRs when a customer repeatedly withdrew cash
aggregating over $10,000 by means of multiple checks, each
written for slightly under $10,000. The bank argued that it had
not engaged in willful misconduct because it had not "violated a
____________________
6It is a common rule of statutory interpretation that courts
must give effect to legislative terms wherever possible. See
___
Gade v. National Solid Wastes Management Ass'n, 112 S. Ct. 2374,
____ ______________________________________
2384 (1992); United States v. Menasche, 348 U.S. 528, 538-39
_____________ ________
(1955). We cite this familiar tenet because there would have
been no need for Congress to include the term "willfully" at all
if the government's reading of section 5322 were accurate.
12
known legal duty." Id. at 856. We rejected the bank's plea
___
because the evidence revealed that the bank's professed
unawareness about whether the reporting requirements applied to
the transactions was a product of the bank's deliberate
blindness. See id. at 856, 857.
___ ___
Our opinion in Bank of New England is not pathbreaking;
___________________
it merely represents a particularized application of the rule
defenestrating mistake-of-law defenses when the mistakes in
question result from intentional or reckless disregard of a legal
duty. See McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133,
___ __________ __________________
135 n.13 (1988) (willfulness may be shown either by actual
knowledge or by "reckless disregard for the matter of whether
[defendant's] conduct was prohibited by the statute"); Trans
_____
World Airlines, Inc. v. Thurston, 469 U.S. 111, 126-28 (1985)
_____________________ ________
(similar); see also Bank of New England, 821 F.2d at 886 ("the
___ ____ ____________________
Supreme Court has endorsed defining willfulness, in both civil
and criminal contexts, as 'a disregard for the governing statute
and an indifference to its requirements'") (quoting Trans World
___________
Airlines, 469 U.S. at 127).
________
We adhere today to the teachings of Bank of New England
___________________
and build upon that foundation. We believe that, in respect to
alleged violations of the BFTRA's CTR provisions, section 5322's
willfulness criterion demands that the government prove either
the violation of a known legal duty or the reckless disregard of
the same. See Bank of New England, 821 F.2d at 866. We move
___ ___________________
forward from that point, therefore, to consider a question not
13
present in Bank of New England: the significance of section 5322
___________________
in the antistructuring context.
C. Willful Structuring: One Word, One Meaning.
C. Willful Structuring: One Word, One Meaning.
______________________________________________
Section 5322 provides criminal sanctions for both CTR
and structuring offenses. As we determine the mens rea
____ ___
requirement for the latter group of crimes, it is axiomatic that
the plain words and structure of the statute must be paramount.
See, e.g., Pennsylvania Dep't of Pub. Welfare v. Davenport, 495
___ ____ __________________________________ _________
U.S. 552, 557-58 (1990); Stowell v. Ives, 976 F.2d 65, 69 (1st
_______ ____
Cir. 1992). Ordinarily, "identical terms within an Act bear the
same meaning." Estate of Cowart v. Nicklos Drilling Co., 112 S.
________________ ____________________
Ct. 2589, 2596 (1992); accord Sullivan v. Stroop, 496 U.S. 478,
______ ________ ______
484 (1990). In the case at hand, the Cowart presumption is
______
particularly strong. We explain briefly.
While courts have found on infrequent occasion that
Congress intended a word to have different connotations when used
in different provisions of the same Act, see, e.g., Greenwood
___ ____ _________
Trust Co. v. Massachusetts, 971 F.2d 818, 830 n.10 (1st Cir.
__________ _____________
1992), petition for cert. filed, 61 U.S.L.W. 3382 (U.S. Nov. 4,
________ ___ _____ _____
1992) (No. 92-794); New Eng. Tel. & Tel. Co. v. Public Utils.
_________________________ ______________
Comm'n, 742 F.2d 1, 8 (1st Cir. 1984), cert. denied, 476 U.S.
______ _____ ______
1174 (1986), those instances almost always involve, at a bare
minimum, multiple uses of a term or phrase within a panoramic
statutory scheme. Here, however, we are not dealing with
repetitions of a word at diverse points in a statute, but with a
single word in a single statutory section. Ascribing various
14
meanings to a single iteration of a single word reading the
word differently for each code section to which it applies
would open Pandora's jar. If courts can render meaning so
malleable, the usefulness of a single penalty provision for a
group of related code sections will be eviscerated and, by
extension, almost any code section that references a group of
other code sections would become susceptible to individuated
interpretation.
Furthermore, if Congress wanted the purposive mens rea
____ ___
in the antistructuring statute to stand alone, it had several
simple options. It could, for example, have placed the
antistructuring provision somewhere other than in Subchapter II,
or amended the criminal sanctions provision to except structuring
violations.7 It exercised none of the available options. Thus,
absent powerful evidence to the contrary, we believe courts
should presume that Congress intended the mens rea set by section
____ ___
5322 to apply in equal measure to both CTR violations and
structuring offenses.
We recognize, of course, that notwithstanding these
problems, several other courts have scuttled the Cowart
______
presumption and read the word "willfully" in section 5322
differently as it applies to breaches of different currency
regulations. Compare, e.g., Brown, 954 F.2d at 1568 (ruling that
_______ ____ _____
____________________
7In fact, Congress chose precisely this course for the
provision requiring reports on foreign currency transactions, 31
U.S.C. 5315, leaving only civil penalties available for
enforcement of that provision. See 31 U.S.C. 5322(a)-(b).
___
15
knowledge of the antistructuring law was not required to ground a
structuring conviction) and Scanio, 900 F.2d at 490 (same) with,
___ ______ ____
e.g., United States v. Eisenstein, 731 F.2d 1540, 1543 (11th Cir.
____ _____________ __________
1984) (upholding mistake-of-law defense for currency import and
export violations) and United States v. Dichne, 612 F.2d 632, 636
___ _____________ ______
(2d Cir. 1979) (similar), cert. denied, 445 U.S. 928 (1980). See
_____ ______ ___
also Dashney, 937 F.2d at 539-40 (declaring mistake of law to be
____ _______
a defense in respect to violations of currency import and export
regulations but not in respect to structuring offenses). To
warrant redefining "willfully" from crime to crime within the
same statute, these courts generally attempt to distinguish
antistructuring regulations from, say, currency importing
regulations, on the basis of the "reasonable probability that
knowledge [of the law] might be obtained" more easily in the
former situation than in the latter. Scanio, 900 F.2d at 490
______
(citation omitted).
We must respectfully disagree with these courts. The
distinction that they draw simply does not justify the
transmogrification of the word "willfully" into a statutory
chameleon. We are, moreover, particularly chary about adopting
so pleochroic an approach in light of the more consistent, less
complicated alternative offered in Bank of New England, 821 F.2d
___________________
at 856. That alternative, which derives great vitality from the
Supreme Court's language, see McLaughlin, 486 U.S. at 133; Trans
___ __________ _____
World Airlines, 469 U.S. at 126, provides a fair, workable,
_______________
mistake-of-law defense to those accused of currency-related
16
crimes and at the same time ensures that defendants who know of
the law's requirements in a general sense, but recklessly or
intentionally fail to investigate the legality of structuring or
other proscribed activity, will be found guilty.
We hold, therefore, that the plain language of section
5322 governs; that the unitary willfulness standard of section
5322 should be given an identical meaning with respect to
structuring and CTR violations;8 and that, therefore, an
____________________
8Because this issue is susceptible to resolution in terms of
the plain meaning and structure of the statute, we need not probe
the legislative history. See United States v. Charles George
___ _____________ ______________
Trucking Co., 823 F.2d 685, 688 (1st Cir. 1987) (one should
_____________
"resort to the legislative history and other aids of statutory
construction only when the literal words of the statute create
ambiguity or lead to an unreasonable interpretation") (citation
and internal quotation marks omitted); accord Barnhill v.
______ ________
Johnson, 112 S. Ct. 1386, 1391 (1992); Stowell, 976 F.2d at 69.
_______ _______
We note in passing, however, that while the legislative history
with regard to section 5322 and the antistructuring amendments in
no way contradicts our analysis of how the word "willfully"
should be construed, this is yet another case where the
legislative history of a statute "is more conflicting than the
text is ambiguous." Wong Yang Sung v. McGrath, 339 U.S. 33, 49
______________ _______
(1950).
The report issued by the House of Representatives in
conjunction with the bill which included the criminal sanctions
section now codified as 31 U.S.C. 5322 merely recapitulated the
Act's criminal provisions. And, although the House and Senate
issued seventeen reports dealing with a salmagundi of proposed
bills, features of which were amalgamated into the Anti-Drug
Abuse Act of 1986 (the bill which contained the antistructuring
provision now codified as 31 U.S.C. 5324), there was no House
or Senate report accompanying the Act. See 1986 U.S.C.C.A.N.
___
5393 (noting the absence of a report but listing related
reports). To be sure, the House considered and rejected
several alterations to section 5322 that would have changed the
term "willfully" to "knowingly." See, e.g., H.R.Rep. No. 855,
___ ____
99th Cong., 2d Sess. 7, 27 (1986). The Senate likewise
considered legislation designed to make section 5322 read
"knowingly" instead of "willfully." See S. 2683, 99th Cong., 2d
___
Sess. (1986). The purpose of this proposed change was to
eliminate the possibility of antistructuring liability premised
17
unintentional, non-reckless mistake of law is a complete defense
to a structuring charge.
D. Willfulness in the Tax Code.
D. Willfulness in the Tax Code.
______________________________
In an effort to read the word "willfully" in a more
charitable manner, all three appellants urge that the Court's
recent decision in United States v. Cheek, 111 S. Ct. 604 (1991),
_____________ _____
signifies that federal courts should apply a purely subjective
standard to virtually all white-collar crimes that require a mens
____
rea of willfulness as an element of the offense. Such a standard
___
differs from the standard we endorse today because it would allow
mistakes born of intentional or reckless ignorance to insulate
defendants from criminal liability. Donovan's case illustrates
the practical effect of this suggestion: had the trial judge
defined willfulness exclusively in terms of a subjective intent
to disobey the law, the jury might have exonerated the defendant
on the basis of a genuine, albeit reckless, misunderstanding
about the law's requirements.
We do not think that Cheek can carry the cargo that
_____
____________________
upon "reckless disregard" of the law. See S. Rep. No. 99-433,
___
99th Cong., 2d Sess. 1, 8 (1986). The amendment failed.
We see no point in reciting additional book and verse.
The most serviceable conclusion that can be woven from the
language in the sundry reports attached to ultimately
unsuccessful legislation is that, during the extended drafting
and redrafting of various bills respecting currency transactions,
Congress, or at least some of its members, reconsidered the mens
____
rea of section 5322, assessed its relationship with the proposed
___
antistructuring provision, and elected not to act.
18
appellants load upon it.9 Cheek was a criminal tax case. The
_____
Court noted that the term "willfully," as used in criminal tax
statutes, had long been interpreted "as carving out an exception
to the traditional rule" that ignorance of the law affords no
defense to a criminal prosecution. Id. at 609. Nowhere in
___
Cheek, or in the Court's earlier opinions involving criminal
_____
prosecutions under the tax laws, see, e.g., United States v.
___ ____ ______________
Pomponio, 429 U.S. 10 (1976) (per curiam); United States v.
________ ______________
Bishop, 412 U.S. 346 (1973); United States v. Murdock, 290 U.S.
______ _____________ _______
389 (1933), is there any indication that courts should use a
purely subjective standard in evaluating state-of-mind defenses
under other federal statutes. Rather, the Cheek Court repeatedly
_____
qualified its discussion of the point by referring to the special
context criminal tax prosecutions from whence the discussion
proceeded. See, e.g., Cheek, 111 S. Ct. at 609, 610. The
___ ____ _____
Court's earlier opinions stressed the same point. See, e.g.,
___ ____
Pomponio, 429 U.S. at 12 & n.3; Bishop, 412 U.S. at 360-61. This
________ ______
repeated qualification makes clear that the Court has crafted a
narrow exception, limited to tax cases, in which subjective
mistake of law can constitute an absolute defense.
Such a conclusion coheres with our long-held
____________________
9Our dissenting brother suggests that it is unnecessary for
us to discuss the range of Cheek. See post at 33. We disagree.
_____ ___ ____
If the Cheek rationale extended beyond the boundaries of the tax
_____
code, as appellants claim it does, the result we reach today
would be altered, at least as to appellant Aversa. Moreover, it
is essential to any careful understanding of section 5322's
willfulness standard that we consider, and account for, the
Court's explication of a parallel problem arising under the tax
code.
19
understanding of the tax-crime exception. In United States v.
_____________
Aitken, 755 F.2d 188 (1st Cir. 1985), we acknowledged the
______
uniqueness of the tax statutes' mens rea requirements. See id.
____ ___ ___ ___
at 193 ("That internal revenue reporting and filing requirements
are an enclave apart is recognized."). We read Cheek as
_____
confirming and fortifying the stance that we took in Aitken.
______
Moreover, and finally, the rationales supporting a
subjective mistake-of-law defense in tax-crime cases do not apply
to laws and regulations of the kind at issue here. As the Second
Circuit noted, "[o]ne of the most esoteric areas of the law is
that of federal taxation. It is replete with 'full-grown
intricacies,' and it is rare that a 'simple, direct statement of
the law can be made without caveat.'" United States v. Regan,
_____________ _____
937 F.2d 823, 827 (citation omitted), modified, 946 F.2d 188 (2d
________
Cir. 1991), cert. denied, 112 St. Ct. 2273 (1992). The federal
_____ ______
tax code is not only enormous, detailed, and technical, but also
interrelated and highly nuanced. Simply reading the words of the
tax code does not always reveal the line between legal and
illegal conduct. And for over sixty years, the Supreme Court has
held that Congress does not intend to punish those who, in good
faith, stray past that line.
For these reasons, we join the courts of appeals that
have found the Cheek doctrine inapplicable to criminal
_____
prosecutions under the currency reporting laws.10 See, e.g.,
___ ____
____________________
10Attempts to expand Cheek's horizons have been regularly
_____
rejected in most other contexts as well. See, e.g., United
___ ____ ______
States v. Hollis, 971 F.2d 1441, 1451 (10th Cir. 1992) (rejecting
______ ______
20
United States v. Beaumont, 972 F.2d 91, 94-95 (5th Cir. 1992);
______________ ________
Brown, 954 F.2d at 1569 n.2; Caming, 968 F.2d at 241; Dashney,
_____ ______ _______
937 F.2d at 539-40. The currency statutes are comparatively few
in number, target a much narrower range of conduct, and under the
current regulations affect a considerably smaller constituency.
The regulatory scheme, overall, is not intricate or even
especially subtle. We think these distinctions are dispositive.
Accordingly, we reaffirm Aitken and continue to hold that the
______
Cheek exception is restricted to tax crimes. In a prosecution
_____
brought under Subchapter II, as we have explained, the criminal
intent required for conviction is either the violation of a known
legal duty or reckless disregard of the law. Consequently,
appellants' requests for the application of a wholly subjective
standard were properly denied by Judges Loughlin and Devine.
III. APPLYING THE LAW
III. APPLYING THE LAW
All that remains is for us to apply the fruits of our
analysis to each appellant's situation.
A. Donovan.
A. Donovan.
___________
In Donovan's case, the trial judge instructed the jury
that Donovan's actions were willful if he had the "bad purpose to
____________________
extension of Cheek to loan fraud context); United States v. Gay,
_____ _____________ ___
967 F.2d 322, 327 (9th Cir.) (same; mail fraud case), cert.
_____
denied, 113 S. Ct. 359 (1992); United States v. Chaney, 964 F.2d
______ _____________ ______
437, 446 n.25 (5th Cir. 1992) (same; bank fraud case); United
______
States v. Dockray, 943 F.2d 152, 156 (1st Cir. 1991) (same; mail
______ _______
and wire fraud prosecution). A few courts, however, particularly
those faced with cases involving the willful destruction of
government property, have applied a Cheek-like standard. See,
_____ ___
e.g., United States v. Mills, 835 F.2d 1262, 1265 (8th Cir.
____ ______________ _____
1987); United States v. Moylan, 417 F.2d 1002, 1004 (4th Cir.
_____________ ______
1969), cert. denied, 397 U.S. 910 (1970).
_____ ______
21
disobey or to disregard the law." While Judge Devine did not
give the exact instruction which Donovan requested, the
instruction he gave was almost identical to the instruction which
we approved for CTR violations in Bank of New England, 821 F.2d
____________________
at 855. Moreover, Donovan's requested instruction focused on bad
motive and the Cheek Court made clear that a showing of bad
_____
motive is more restrictive than necessary, even under the tax-
crime standard. See Cheek, 111 S. Ct. at 610; see also Pomponio,
___ _____ ___ ____ ________
429 U.S. at 13. Finally, the judge allowed the parties to
introduce evidence pertaining to Donovan's state of mind
regarding the law and the facts.
The trial court which, in instructing the jury, had
no obligation to parrot the precise language favored by either
side gave a charge that, viewed in its entirety, adequately
explained the legal issues, including every legitimate theory
upon which Donovan's defense could rest. No more was exigible.
See United States v. McGill, 953 F.2d 10, 13 (1st Cir. 1992);
___ ______________ ______
United States v. Nivica, 887 F.2d 1110, 1124 (1st Cir. 1989),
_____________ ______
cert. denied, 494 U.S. 1005 (1990). This is especially true
_____ ______
where, as here, the defendant's subjective mistake-of-law
proposal went well beyond what the law requires in its insistence
upon proof of evil motive. See, e.g., United States v. David,
___ ____ _____________ _____
940 F.2d 722, 738 (1st Cir. 1991) (holding that the district
court may appropriately refuse to give a proposed jury
instruction "which is incorrect, misleading, or incomplete in
some material respect"), cert. denied, 112 S. Ct. 605, 908, 1298,
_____ ______
22
2301 (1992).
B. Aversa and Mento.
B. Aversa and Mento.
____________________
We find the remaining appeals to be cut from different
cloth. Because of restrictive rulings made below, neither Aversa
nor Mento ever had a chance to present a mistake-of-law defense.
Both of them were precluded by the government's successful motion
in limine from offering any evidence as to their ignorance of the
__ ______
antistructuring law. Additionally, in Mento's case the district
judge charged the jury that mistake of law was no defense,
declaring: "It is not necessary that the United States prove
that the defendant knew that the structuring of his currency
transactions was unlawful."
Since neither of these defendants were afforded an
opportunity to develop the record, and since both of them claim
not to have known that what they did was illegal, we cannot say
what a fully amplified record might show regarding Aversa's and
Mento's familiarity with, or actual knowledge of, the
antistructuring law.11 Similarly, we cannot say how the proof
might shape up in respect to reckless disregard or deliberate
blindness. It follows inexorably that, on this scumbled record,
Aversa's and Mento's convictions cannot stand.
IV. CONCLUSION
IV. CONCLUSION
We need go no further. In the context of the
antistructuring and CTR provisions of Subchapter II, we find that
____________________
11We do know, however, that in the plea agreement the
government stipulated that it had no evidence of actual knowledge
on Aversa's part.
23
a willful action is one committed in violation of a known legal
duty or in consequence of a defendant's reckless disregard of
such a duty. In Donovan's case, the introduction of evidence was
not unduly restricted and the district court's charge to the jury
was adequate to comport with the proper standard. Thus, his
appeal fails.12 Because neither Aversa nor Mento had a chance to
present evidence on a mistake-of-law theory, and because the
trial court's jury instruction in Mento's case was harmfully
erroneous, their convictions must be vacated and their cases
remanded for further proceedings. By the terms of Fed. R. Crim.
P. 11(a)(2), Aversa may, if he so elects, withdraw his guilty
plea in the court below. See United States v. Lyons, 898 F.2d
___ _____________ _____
210, 214 n.5 (1st Cir.), cert. denied, 111 S. Ct. 295 (1990).
_____ ______
In Appeal No. 91-1574, the judgment of conviction is
In Appeal No. 91-1574, the judgment of conviction is
_______________________________________________________
affirmed.
affirmed.
________
In Appeals Nos. 91-1363 and 91-1364, the judgments of
In Appeals Nos. 91-1363 and 91-1364, the judgments of
_______________________________________________________
conviction are vacated and the cases remanded for further
conviction are vacated and the cases remanded for further
_________________________________________________________________
proceedings not inconsistent herewith.
proceedings not inconsistent herewith.
_____________________________________
Concurring Opinion follows
Dissent follows Concurring Opinion
____________________
12Donovan's remaining ground of appeal was convincingly
dispatched in the prior panel opinion. Hence, we reinstate that
opinion in redacted form, expressly adopting Part IV thereof.
24
BREYER, Chief Judge (concurring). I believe that
___________
criminal prosecutions for "currency law" violations, of the
sort at issue here, very much resemble criminal prosecutions
for tax law violations. Compare 26 U.S.C. 6050I, 7203
_______
with 31 U.S.C. 5322, 5324. Both sets of laws are
____
technical; and both sets of laws sometimes criminalize
conduct that would not strike an ordinary citizen as immoral
or likely unlawful. Thus, both sets of laws may lead to the
unfair result of criminally prosecuting individuals who
subjectively and honestly believe they have not acted
criminally. United States v. Cheek, 111 S. Ct. 604 (1991),
_____________ _____
sets forth a legal standard that, by requiring proof that
the defendant was subjectively aware of the duty at issue,
would avoid such unfair results. Were I writing on a blank
slate, the similarity of the two sets of criminal laws might
well lead me to conclude that the same standards should
apply in both sets of cases. Other circuits, however, have
distinguished "currency reporting" cases from Cheek. See en
_____ ___
banc opinion, supra at p. 20. Moreover, Supreme Court
_____
opinions have strongly suggested that criminal tax cases
constitute a separate enclave in the law. See en banc
___
opinion, supra at pp. 18-19.
_____
25
25
In addition, the court today announces a standard
that does not threaten to allow conviction of a defendant
with an innocent state of mind. Under the court's standard,
the government must prove that the defendant either
subjectively knew of his legal duty, or that he was
"reckless" in respect to the existence of that duty. Cf.
___
McLaughlin v. Richland Shoe Co., 486 U.S. at 135 n.13 (even
__________ _________________
objectively unreasonable failure to determine correct legal
obligation is not "willful," as long as such failure falls
short of recklessness). One can imagine how a person
frequently in contact with these laws, such as a financial
officer or drug-fund courier, could be found to have been
"reckless" in failing to learn relevant legal data.
However, it is difficult to see how one could convict an
ordinary citizen on this basis, i.e., in the absence of
____
actual, subjective knowledge of the legal duty, for
"recklessness" involves the conscious disregard of a
substantial risk. See Model Penal Code 2.02(2)(c)(1985);
___
cf. United States v. Murdock, 290 U.S. 389, 395 (1933)
___ ______________ _______
(conduct is "willful" in the context of a criminal statute
if it is "marked by careless disregard [for] whether or not
one has the right to act").
26
26
I therefore conclude that the court's announced
standard is sufficiently close to the purely subjective
standard set forth in Cheek that it will avoid using the
_____
criminal law, in this technical area, to punish those with
an innocent state of mind, those who did not know they were
violating the law and who reasonably failed to investigate
the issue. I therefore join the court's opinion.
Dissent follows
27
27
TORRUELLA, Circuit Judge (Dissenting). Although I
_____________
agree with much of what is stated by the majority, and even more
with Chief Judge Breyer's concurrence, I write separately because
I believe neither opinion goes far enough. In my view the
prosecution of these cases is defective on two grounds: (1) As
clearly reflected in the legislative history of these statutes,
appellants are improper targets of money laundering accusations,
and (2) even if the charges are within statutory scope, the
standard of scienter in Cheek v. United States, 498 U.S. 192
_____ _____________
(1991), is applicable to them.
I. ACTIVITY TARGETED BY THE BANK
I. ACTIVITY TARGETED BY THE BANK
_________________________________
SECRECY ACT, AS AMENDED BY THE
SECRECY ACT, AS AMENDED BY THE
_________________________________
MONEY LAUNDERING CONTROL ACT
MONEY LAUNDERING CONTROL ACT
____________________________
I need not repeat the facts as stated by the majority.
I will only emphasize that appellants are neither the recipients
of illegal drug funds or engaged in laundering money proceeds
from criminal ventures, nor are they income tax evaders. In
fact, particularly in the case of appellants Aversa and Mento,
they did nothing prior to the alleged "structuring" actions that
even approximates the commission of a criminal offense. I focus
on the Bank Secrecy Act and its more recent amendment, the Money
Laundering Control Act, to determine whether appellants' actions
are within the purview of the conduct that Congress intended to
criminalize by this legislation.
-28-
28
The Bank Secrecy Act, enacted in 1970, was part of the
Bank Records and Foreign Transaction Act.13 The unequivocal
concern of this complex legislation was to prohibit the use of
foreign banks to "launder" the proceeds of illegal activity or
evade federal income taxes.14 It became apparent, however,
that these enactments had little impact on large-scale money
laundering related to illegal drug transactions, and that illicit
funds were flowing in ever-increasing amounts into financial
institutions in the United States.15 As a result, Congress
enacted the Anti-Drug Abuse Act of 1986,16 Title I, subtitle H
of which was the Money Laundering Control Act of 1986. This
subtitle included an anti-structuring provision.17
One thing clearly emerges from the legislative history
of this statute: Congress wished to attack money laundering
associated with organized crime or related criminal activity,
particularly the illicit drug trade. See S. Rep. No. 433, 99th
___
Cong., 2d Sess. (1986) (accompanying S. 2683). A casual review
of the Senate Report accompanying this Act reveals that the term
"money laundering," or its equivalent, is used more than 100
____________________
13 Pub. L. No. 91-508, 84 Stat. 1114 (1970) (codified as amended
in scattered sections of 12 U.S.C., 15 U.S.C. and 31 U.S.C.).
14 S. Rep. No. 433, 99th Cong., 2d Sess. 2-3 (1986).
15 See The President's Commission on Organized Crime, Interim
___
Report to the President and the Attorney General, The Cash
_________
Connection: Organized Crime, Financial Institutions, and Money
_________________________________________________________________
Laundering (1984); S. Rep. No. 433 (1986).
__________
16 Pub. L. No. 99-570, 100 Stat. 3207.
17 31 U.S.C.A. 5324 (West Supp. 1992).
-29-
29
times, and that it refers to organized crime and criminal
activity on no less than 53 occasions. Id. The House Report
___
displays a similar preoccupation. See H.R. Rep. No. 746, 99th
___
Cong., 2d Sess. (1986) (accompanying H.R. 5176). The first major
heading of this report is "Drug Trafficking and Money
Laundering." Id. at p. 16. The report refers to "money
___
laundering" approximately 73 times, and to organized crime and
illegal drug trafficking 53 times.
Given the congressional preoccupation with money
laundering it is surprising that neither the term "money
laundering," nor the new crime created by the Money Laundering
Control Act, "structuring," are defined by the statute.
Nevertheless, the House Report states the following:
Money Laundering Defined. - The
_____________________________
President's Commission on Organized Crime
has defined money laundering as the
"process by which one conceals the
existence, illegal source, or illegal
application of income, and then disguises
that income to make it appear
legitimate." In other words, laundering
involves the hiding of the paper trail
that connects income or money with a
person in order for such person to evade
__________________________________
the payment of taxes, avoid prosecution,
_________________________________________
or obviate any forfeiture of his illegal
_________________________________________
drug income or assets. . . .
_____________________
Id. at 16 (emphasis supplied).
___
I derive additional guidance from the Senate Report
that discusses what later became 18 U.S.C. 1956(a)(1), which is
entitled Laundering of Monetary Instruments. See S. Rep. No. 433
__________________________________ ___
at 9. The report calls section 1956 "the basic money laundering
-30-
30
offense." Id. That section, which in effect defines
___
"laundering," provides:
-31-
31
Whoever knowing that the property
_________________________________________
involved in a financial transaction
_________________________________________
represents the proceeds of some form of
_________________________________________
unlawful activity, conducts or attempts
__________________
to conduct such a financial transaction
which in fact involves the proceeds of
specified unlawful activity--(B) knowing
that the transaction is designed in whole
or in part -- (i) to conceal or disguise
the nature, the location, the source, the
ownership, or the control of the proceeds
of specified unlawful activity; or (ii)
to avoid a transaction reporting
requirement under State or Federal law .
. . . [will be liable for conviction
under this section].
18 U.S.C. 1956(a)(1) (emphasis supplied).
On the other hand, "structuring" is only defined by
regulation. 31 C.F.R. 103.53, entitled "Structured
Transactions," provides that:
No person shall for the purpose of
evading the reporting requirement of
103.22 with respect to such transaction:
. . .
(c) Structure (as that term is defined
in 103.11(n) of this part) or assist in
structuring, or attempt to structure or
assist in structuring, any transaction
with one or more domestic financial
institutions.
31 C.F.R. 103.53.
Regulation 31 C.F.R. 103.11(n) (1989) defines
"structure" or "structuring" as:
(n) Structure (structuring). For
________________________
purposes of section 103.53, a person
structures a transaction if that person,
acting alone, or in conjunction with, or
on behalf of, other persons, conducts or
attempts to conduct one or more
transactions in currency, in any amount,
at one or more financial institutions, on
-32-
32
one or more days, in any manner, for the
purpose of evading the reporting
requirements under section 103.22 of this
Part. "In any manner" includes, but is
not limited to, the breaking down of a
single sum of currency exceeding $10,000
into smaller sums, including sums at or
below $10,000, or the conduct of a
transaction, or series of currency
transactions, including transactions at
or below $10,000. The transaction or
transactions need not exceed the $10,000
reporting threshold at any single
financial institution on any single day
in order to constitute structuring within
the meaning of this definition.
31 C.F.R. 103.11(n) (1989); see also S. Rep. No. 433 at 22, 25
________
("structuring" is "breaking up of what is really one financial
transaction into several smaller ones to evade reporting
requirements").
During the hearings preceding enactment of this
legislation concern was expressed that this maze of interwoven
regulations and statutes, although aimed at crippling organized
crime, "could lead to prosecution of people who were not in any
way involved in money laundering." See S. Rep. No. 433 at 12;
___
see also John K. Villa, A Critical View of Bank Secrecy Act
_________ ______________________________________
Enforcement and the Money Laundering Statute, 37 Cath. U.L. Rev.
____________________________________________
489 (1988). The present appeals are living proof of that
prophecy. Appellants are being prosecuted for violation of the
money laundering statutes notwithstanding that they are not in
any way involved in such activities.
The situation presented by these charges is not unlike
that in McNally v. United States, 483 U.S. 350 (1987), in which
_______ _____________
the Supreme Court reversed a unanimous litany of circuit court
-33-
33
decisions18 condoning the extension of the federal mail fraud
statute19 beyond the scope of Congress' intended coverage. In
charging appellants under the money laundering statutes the
government similarly overlooked that "[i]n considering the scope
of [a] statute it is essential to remember Congress' purpose in
enacting it." Id. at 365 (Stevens, J., dissenting).
___
In prosecuting appellants under the Bank Secrecy Act as
amended by the Money Laundering Control Act, the government has
transgressed Congress' purpose in the enactment of these
statutes, which was to detect and punish "financial
transaction[s] represent[ing] the proceeds of some form of
unlawful activity," 18 U.S.C. 1956(a)(1). We should not stand
idly while this overreaching transforms common citizens into
criminals.
II. THE CHEEK STANDARD
II. THE CHEEK STANDARD
__________________
While it could have been possible to leave Cheek v.
_____
United States, 498 U.S. 192, 111 S. Ct. 604 (1991), out of this
_____________
appeal altogether, the majority opinion seeks to restrict its
present and future use by preemptive action. I believe it would
be more appropriate to consider one case at a time. Furthermore,
lest there be any doubt, I certainly am not of the view that the
Cheek standard should apply in blanket fashion "to virtually all
_____
white collar crimes that require a mens rea of willfulness as an
____ ___
____________________
18 Including some from this circuit. See, e.g., United States
___ ____ ______________
v. Silvano, 812 F.2d 754 (1st Cir. 1987).
_______
19 18 U.S.C. 1341.
-34-
34
element of the offense." Ante at 18. In my view each
____
legislative scheme must be separately pondered to determine
whether Cheek applies. But I cannot agree that because Cheek was
_____ _____
an income tax case that the principle espoused therein regarding
mens rea is necessarily limited to such tax cases. I can find
____ ___
nothing in Cheek to justify such a conclusion or limitation.
_____
Logic and fundamental fairness dictate that some traditional
legal maxims, up to now blindly accepted, make little sense in
the context of some of today's complex regulatory environments.
Ultimately Cheek stands for the proposition that at some point a
_____
legal fiction may so depart from reality as to be untenable as a
basis for criminal responsibility.
In Cheek, the Supreme Court examined the meaning of
_____
"willfully" as used in the income tax statutes. Defendant Cheek,
a commercial airline pilot, refused to file income tax returns
after 1979. As a result, Cheek was indicted and charged with
willfully violating 26 U.S.C. 7203 & 7201.20
At trial, Cheek presented as his defense that "he
sincerely believed that the tax laws were being
unconstitutionally enforced and that his actions during 1980-1986
period were lawful." Cheek, 498 U.S. at ___, 111 S. Ct. at 607.
_____
During deliberations, the jury was divided on whether Cheek
honestly and reasonably believed that he was not required to pay
____________________
20 Section 7201 criminalizes the "willful[] attempt[] in any
manner to evade or defeat any tax imposed by this title or the
payment thereof." 26 U.S.C. 7201. Section 7203 criminalizes
the willful failure to file a return as required under Title 26.
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35
income taxes. However, the district court instructed the jury
"that a good-faith misunderstanding of the law or a good faith
belief that one is not violating the law, if it is to negate
willfulness, must be objectively reasonable." 498 U.S. at ___,
111 S. Ct. at 608. With this instruction in hand, the jury found
Cheek guilty on all counts. Cheek appealed on the ground that
this instruction was erroneous. The Seventh Circuit affirmed.
The Supreme Court, relying on its prior criminal tax
precedents interpreting the word "willfully," reversed Cheek's
conviction. It held that no matter how unreasonable a judge
might deem Cheek's beliefs, the jury must have the opportunity to
hear them and make the final determination as to whether he had a
good faith misunderstanding of the law or a good faith belief
that he was not violating the law, thus negating the element of
willfulness. 498 U.S. at ___, 111 S. Ct. at 610.21
Cheek establishes that the government must prove in a
_____
criminal tax case a "willful" violation, which requires proof
that a defendant voluntarily and intentionally violated a known
legal duty. 498 U.S. at ___, 111 S. Ct. at 611. More in point
with the present appeals, however, the Court stressed that
[t]he proliferation of statutes and
regulations has sometimes made it
difficult for the average citizen to know
and comprehend the extent of the duties
____________________
21 The Court therefore held that the district court erred when
it instructed the jury that Cheek's "asserted beliefs that wages
are not income and that he was not a taxpayer within the meaning
of the Internal Revenue Code should not be considered by the jury
in determining whether Cheek has acted willfully." 498 U.S. at
___, 111 S. Ct. at 613.
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36
and obligations imposed by the tax laws.
Congress has accordingly softened the
impact of the common-law presumption by
making specific intent to violate the law
an element of certain federal criminal
tax offenses.
498 U.S. at ___, 111 S. Ct. at 609. The Court could well have
been talking about the arcane money laundering regulatory scheme
presented by these appeals.
It is pointed out that the application of Cheek to the
_____
anti-structuring statute was rejected by the Tenth Circuit in
United States v. Dashney, 937 F.2d 532 (10th Cir.), cert. denied,
_____________ _______ ____________
60 U.S.L.W. 3343 (1991), and that other courts have followed
Dashney's analysis. See United States v. Brown, 954 F.2d 1563
_______ ___ ______________ _____
(11th Cir. 1992); United States v. Rogers, No. 91-5106, slip op.
_____________ ______
(4th Cir. Apr. 24, 1992).
In Dashney, the court concluded that the anti-
_______
structuring act did not require, as an element of the offense,
proof of a specific intent to violate the act because, the
provisions of the anti-structuring act are "straightforward" when
compared to the criminal tax statutes at issue in Cheek.
_____
Dashney, 937 F.2d at 540. After spending a considerable amount
_______
of time studying these statutes and regulations, as well as their
legislative history, I must confess to a different view.
The conclusion that engaging in a currency transaction
is more "straightforward" than filing an income tax return is at
best, unconvincing. The legal duty at issue here -- the
illegality of structuring a transaction in order to prevent a
bank from filing a currency transaction report -- does not even
-37-
37
approximate the general knowledge of the duty of taxpayers to
file an income tax return.22 The statutes criminalizing the
conduct of failing to file an income tax return have been around
for more than 70 years whereas the anti-structuring act did not
clearly criminalize the conduct of structuring transactions until
1986, when Congress enacted 31 U.S.C. 5324 and 5522.23 If
nothing else emerges from a study of this byzantine labyrinth of
legislation and regulation, it is that an unsuspecting common
citizen can easily fall prey to this uncommon area of the law.
Apparently, with this in mind the Treasury Department proposed,
but failed to adopt, regulations aimed at publicizing the
criminal offense underlying 5324. See 54 Fed. Reg. 20,398
___
____________________
22 In Cheek, Justice Blackmun, with whom Justice Marshall joined
_____
in dissent, stated that:
[I]t is incomprehensible to me how, in
this day, more than 70 years after the
institution of our present federal income
tax system . . . any taxpayer of
competent mentality can assert as his
defense to charges of statutory
willfulness the proposition that the wage
he receives for his labor is not income
. . . .
498 U.S. at ___, 111 S. Ct. at 615.
23 In fact, until the enactment of the Money Laundering Act, a
conflict among the circuits existed as to whether it was a crime
to structure deposits for the purpose of preventing the bank from
reporting. Compare United States v. Larson, 796 F.2d 244, 246-47
_______ _____________ ______
(8th Cir. 1986); United States v. Varbel, 780 F.2d 758, 760-63
_____________ ______
(9th Cir. 1986); United States v. Denemark, 779 F.2d 1559, 1561-
_____________ ________
64 (11th Cir. 1986); United States v. Anzalone, 766 F.2d 676,
______________ ________
679-83 (1st Cir. 1985) with United States v. Heyman, 794 F.2d
____ _____________ ______
788, 790-93 (2d Cir.), cert. denied, 479 U.S. 989 (1986); United
____________ ______
States v. Cook, 745 F.2d 1311, 1314-16 (10th Cir. 1984), cert.
______ ____ _____
denied, 469 U.S. 1220 (1985); United States v. Tobon-Builes, 706
______ _____________ ____________
F.2d 1092, 1096-1101 (11th Cir. 1983).
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38
(1989). It is obvious that our Anzalone opinion had little
________
effect on bureaucratic thinking. See Anzalone, 766 F.2d at 681-
___ ________
82.
I recognize, as has the majority, that not all
appellants are in the same legal position on this last issue. In
my opinion, in case No. 91-1574, appellant Donovan received
substantially the jury charge that he was entitled to under
Cheek. Appellants Aversa and Mento in cases Nos. 91-1363 and 91-
_____
1364 did not. The problem is, nevertheless, that in my view none
of the appellants should have been charged because, as previously
explained, the government overstretched its anti-moneylaundering
net. Consequently, I must dissent.
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39
Related
United States v. Murdock
290 U.S. 389 (Supreme Court, 1934)
Spies v. United States
317 U.S. 492 (Supreme Court, 1943)
Wong Yang Sung v. McGrath
339 U.S. 33 (Supreme Court, 1950)
United States v. Menasche
348 U.S. 528 (Supreme Court, 1955)
United States v. Bishop
412 U.S. 346 (Supreme Court, 1973)
United States v. Pomponio
429 U.S. 10 (Supreme Court, 1976)
Trans World Airlines, Inc. v. Thurston
469 U.S. 111 (Supreme Court, 1985)
McNally v. United States
483 U.S. 350 (Supreme Court, 1987)
McLaughlin v. Richland Shoe Co.
486 U.S. 128 (Supreme Court, 1988)
Sullivan v. Stroop
496 U.S. 478 (Supreme Court, 1990)
Cheek v. United States
498 U.S. 192 (Supreme Court, 1991)
Barnhill v. Johnson
503 U.S. 393 (Supreme Court, 1992)
Gade v. National Solid Wastes Management Assn.
505 U.S. 88 (Supreme Court, 1992)
United States v. Charles Demore Jewell
532 F.2d 697 (Ninth Circuit, 1976)
United States v. Robert McCalvin A/K/A Reginal Mack
608 F.2d 1167 (Eighth Circuit, 1979)
United States v. Zeev Dichne
612 F.2d 632 (Second Circuit, 1980)
United States v. Victor Eisenstein, Beno Ghitis
731 F.2d 1540 (Eleventh Circuit, 1984)
New England Telephone and Telegraph Company, Etc. v. Public Utilities Commission of Maine
742 F.2d 1 (First Circuit, 1984)
United States v. David v. Cook
745 F.2d 1311 (Tenth Circuit, 1984)
United States v. Richard A. Aitken
755 F.2d 188 (First Circuit, 1985)
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