ALFREDO LUNA REGALADO, PETITIONER V. UNITED STATES OF AMERICA

   No. 88-1069

   In the Supreme Court of the United States

   October Term, 1988

   On Petition for a Writ of Certiorari to the United States Court of
Appeals for the Fifth Circuit

   Brief for the United States in Opposition

            TABLE OF CONTENTS
   Question Presented
   Opinion below
   Jurisdiction
   Statement
   Argument
   Conclusion

                             OPINION BELOW

   The opinion of the court of appeals (Pet. App. 1a-8a) is reported
at 857 F.2d 789 (Table).

                             JURISDICTION

   The judgment of the court of appeals was entered on August 30,
1988.  A petition for rehearing was denied on October 11, 1988 (Pet.
App. 9a).  On December 6, 1988, Justice White extended the time for
filing a petition for a writ of certiorari to December 27, 1988, and
on December 24, 1988, the petition was filed.  The jurisdiction of
this Court is invoked under 28 U.S.C. 1254(1).

                          QUESTION PRESENTED

   Whether a bank check in bearer form that is more than two months
old is a "monetary instrument" for purposes of 31 U.S.C. 5316(a)(1)(B)
(1982 & Supp. IV 1986) and its implementing regulations.

                               STATEMENT

   Following a jury trial in the United States District Court for the
Southern District of Texas, petitioner was convicted on one count of
knowingly transporting into the United States monetary instruments of
more than $10,000 without filing a Currency and Monetary Report, in
violation of 31 U.S.C. 5316(a)(1)(B) (1982 & Supp. IV 1986).  He was
sentenced to three years' imprisonment and was fined $2,000.  The
execution of the prison term was suspended, and petitioner was placed
on probation for three years.  The court of appeals affirmed (Pet.
App. 1a-8a).

   1. Section 5316(a)(1)(B) (1982 & Supp. IV 1986) of Title 31
provides in pertinent part that persons must file a report whenever
they "transport() * * * monetary instruments of more than $10,000 at
one time * * * to a place in the United States from or through a place
outside the United States * * * ." The term "monetary instruments"
includes "United States coins and currency" and "as the Secretary (of
the Treasury) may prescribe by regulation, coins and currency of a
foreign country, travelers' checks, bearer negotiable instruments,
bearer investment securities, bearer securities, stock on which title
is passed on delivery, and similar material" (31 U.S.C. 5312(a)(3)).
Acting pursuant to the latter grant of authority, the Secretary has
promulgated a regulation, 31 C.F.R. 103.11(k), which defines "monetary
instruments" to include:

         (i) Currency;

         (ii) All negotiable instruments (including personal checks,
      business checks, official bank checks, cashier's checks,
      third-party checks, promissory notes (as that term is defined in
      the Uniform Commercial Code), traveler's checks, and money
      orders) that are either in bearer form, endorsed without
      restriction, made out to a fictitious payee (for the purposes of
      Section 103.23), or otherwise in such form that title thereto
      passes upon delivery;

         (iii) Incomplete instruments (including personal checks,
      business checks, official bank checks, cashier's checks,
      third-party checks, promissory notes (as that term is defined in
      the Uniform Commercial Code), traveler's checks, and money
      orders) signed but with the payee's name omitted;  and

         (iv) Securities or stock in bearer form or otherwise in such
      form that title thereto passes upon delivery.

   2. The evidence at trial is summarized in the court of appeals'
opinion (Pet. App. 2a-3a) and in the government's brief in the court
of appeals (Gov't C.A. Br. 3-6).  It showed that on July 1, 1987,
petitioner, a former Customs officer, returned to the United States
from Mexico.  As he approached the border check point, petitioner
passed a sign notifying persons of the obligation to report currency
or monetary instruments, including negotiable instruments in bearer
form, that exceed $10,000.  At the primary inspection station,
petitioner denied that he was bringing into the United States "money
over $10,000." At the secondary inspection point, he denied that he
was bringing $10,000 or more in cash or checks from Mexico.  A search
of petitioner's car, however, revealed $8,715 in United States
currency, and a check in bearer form in the amount of $2,530.  Pet.
App. 2a-3a;  Gov't C.A. Br. 3-5.

   At trial, Rebecca Benavides, who had signed the check, testified
for the defense.  She stated that she had given the check to
petitioner, who was a bail bondsman, to obtain her brother's release
on bond.  Ms. Benavides explained that she had not intended that the
check be cashed, but rather that the check be held until her brother
could pay petitioner.  She further testified that she did not have
sufficient funds to cover the check;  that petitioner had told her
that he had misplaced the check;  and that she had stopped payment on
the check on July 10, 1987.  Govt. C.A. Br. 5-6.

   Petitioner testified that he knew that the check was the type of
"negotiable instrument" covered by the statute and regulations.  He
stated, however, that he had not known that the check was in the car.
Moreover, petitioner asserted that because the check was two months
old, and because it was not intended to be cashed, he did not think
that the check was negotiable.  Govt. C.A. Br. 6.

   3. The court of appeals affirmed in an unpublished decision (Pet.
App. 1a-8a).  The court explained that the check at issue "is
expressly covered by the applicable Treasury regulations" (id. at 4a),
and that under Texas law the check is a "negotiable instrument in
bearer form" (id. at 5a).  The court rejected petitioner's claim that
the check was valueless, noting that the jury had "found the check to
have the requisite value" (id. at 6a).  /*/

                               ARGUMENT

   1. Petitioner contends (Pet. 4-5) that the check he brought into
the United States was valueless because there were insufficient funds
with which to pay it.  Accordingly, he asserts, "(a)pplication of
Section 5316 to the facts of the instant case does not serve the
legislative purpose" -- which, in his view, is "tracking unusual
currency movements related to illegal activity" (Pet. 5).  But the
question whether the check was actually valueless was one of fact;
and as the court of appeals explained, the jury "found the check to
have the requisite value" (Pet. App. 6a).  In any event, 31 C.F.R.
103.11(k) contains no exception for monetary instruments that the
maker does not intend to be cashed.

   2. Petitioner also contends (Pet. 5-7) that the check was more than
60 days old, "a fact that significantly impaired its status as a
negotiable instrument" under 31 C.F.R. 103.11(k).  Petitioner asserts
that 31 C.F.R. 103.11(k) "should be construed as restricted to a check
where negotiability is not impaired under state law by being overdue
or by being irregular on its face" (Pet. 7).  "Any other
construction," petitioner surmises, "would render 31 C.F.R. Section
103.11(k) inconsistent with Congress' intent and, therefore invalid"
(ibid.).

   There is no basis for petitioner's narrowing construction of 31
C.F.R. 103.11(k).  That provision applies by its terms to "(a)ll
negotiable instruments * * * in bearer form" (31 C.F.R.
103.11(k)(ii)), and not simply to those in which the negotiability is
free from potential defenses.  Indeed, 31 C.F.R. 103.11(k)(iii)
extends to certain "(i)ncomplete instruments" -- which presumably are
subject to challenge by the maker.  Moreover, giving the regulations
their plain meaning does not contravene Congress's intention "to
require certain reports * * * where they have a high degree of
usefulness in criminal, tax, or regulatory investigations or
proceedings" (31 U.S.C. 5311).  A check in bearer form may be of
considerable use for all of those purposes, even if the check is more
than 60 days old.

                              CONCLUSION

   The petition for a writ of certiorari should be denied.

   Respectfully submitted.

   WILLIAM C. BRYSON

      Acting Solicitor General

   EDWARD S.G. DENNIS, JR.

      Assistant Attorney General

   KAREN SKRIVSETH

      Attorney

   MARCH 1989

   /*/ The court of appeals also rejected two challenges to the jury
instructions (Pet. App. 6a-8a).  The petition does not present those
issues.