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Parties Involved:
Sarah H. Peterson
Appellant
United States of America
Appellee

Document Text:

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA, 

Plaintiff-Appellee,

v.  No. 09-4166

SARAH H. PETERSON,

Defendant-Appellant. 

Appeal from the United States District Court

for the Eastern District of Virginia, at Alexandria.

T. S. Ellis, III, Senior District Judge.

(1:08-cr-00348-TSE-1)

Argued: March 24, 2010

Decided: June 17, 2010

Before SHEDD and AGEE, Circuit Judges, and

HAMILTON, Senior Circuit Judge.

Affirmed by published opinion. Senior Judge Hamilton wrote

the opinion, in which Judge Shedd and Judge Agee joined.

COUNSEL

ARGUED: Robert Michael Tyler, MCGUIREWOODS, LLP,

Richmond, Virginia, for Appellant. Gordon D. Kromberg,

OFFICE OF THE UNITED STATES ATTORNEY, Alexandria, Virginia, for Appellee. ON BRIEF: E. Duncan Getchell,

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Jr., Erin M. Sine, MCGUIREWOODS, LLP, Richmond, Virginia, for Appellant. Neil H. MacBride, United States Attorney, Alexandria, Virginia, for Appellee.

OPINION

HAMILTON, Senior Circuit Judge:

Section 2S1.3(b)(2) of the United States Sentencing Guidelines provides a two-level enhancement for certain monetary

transaction offenses if the defendant committed "the offense

as part of a pattern of unlawful activity involving more than

$100,000 in a 12-month period." U.S. Sentencing Guidelines

Manual (USSG) § 2S1.3(b)(2). The issue presented in this

appeal is whether the district court erred at sentencing when

it enhanced the offense level of the appellant, Sarah Hiram

Peterson (Peterson), under this Guidelines section after Peterson pleaded guilty to structuring transactions to evade financial reporting requirements, 31 U.S.C. § 5324(a)(3). Finding

no error, we affirm.

I

Peterson, an Iranian-American, married her second husband, Donald Peterson (Donald), in October 1998. They separated in June 2004 and ultimately divorced in August 2007.

As part of the divorce settlement, Peterson was to pay Donald

$500,000.00, of which $100,000.00 was to be paid from cash

Peterson had stored in a safe deposit box. The money in Peterson’s safe deposit box was proceeds derived from her operation of multiple chiropractic practices in Northern Virginia.

In an attempt to evade the currency reporting requirements

set forth in 31 U.S.C. § 5313(a),1 Peterson made eleven sepa1Under 31 U.S.C. § 5324(a), a person may not structure transactions

"for the purpose of evading the reporting requirements of [31 U.S.C. §]

2 UNITED STATES v. PETERSON

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rate deposits of $9,500.00 or less into her Wachovia bank

account between August 8 and August 29, 2006. According

to Peterson, she structured the $101,200.00 in deposits on the

instructions of Donald, a stockbroker, who advised her to

avoid the burdensome paperwork and to avoid potentially

making United States law enforcement authorities suspicious

about an Iranian-American depositing such a large sum in a

bank account. 

On October 2, 2008, the government filed a one-count

criminal information charging Peterson with structuring transactions to evade reporting requirements, 31 U.S.C.

§ 5324(a)(3). On the same day, Peterson pleaded guilty to that

offense.

In preparation for sentencing, a presentence report was prepared by a United States probation officer. The probation officer set Peterson’s base offense level at 6, USSG

§ 2S1.3(a)(2). The probation officer added eight levels pursuant to USSG § 2B1.1(b)(1)(E), because the structured amount

was more than $70,000.00 but less than $120,000.00. Two

more levels were added pursuant to USSG § 2S1.3(b)(2),

because, according to the probation officer, Peterson’s offense

was committed as part of a pattern of unlawful activity

involving more than $100,000.00 in a twelve-month period.

Following a three level reduction for acceptance of responsibility, USSG § 3E1.1(a) & (b), Peterson’s total offense level

was 13. Coupled with a criminal history category of II,2 the

probation officer set Peterson’s sentencing range at 15 to 21

months’ imprisonment.

5313(a)" or applicable regulations. By regulation, financial institutions

must report all currency transactions involving more than $10,000, subject

to certain exceptions which are not applicable here. See 31 C.F.R.

§ 103.22(b)(1). 

2Peterson had prior convictions for food stamp fraud and for making a

false insurance claim. 

UNITED STATES v. PETERSON 3

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At the sentencing on January 23, 2009, Peterson challenged

the USSG § 2S1.3(b)(2) enhancement, contending that the

enhancement did not apply because her structuring offense

did not involve "a pattern of unlawful activity," which is

defined as "at least two separate occasions of unlawful activity . . . , without regard to whether any such occasion occurred

during the course of the offense or resulted in a conviction for

the conduct that occurred on that occasion." USSG § 2S1.3,

comment. (n.3). According to Peterson, if the structured

money came from one source, here her safe deposit box, there

could be only one offense, see United States v. Davenport,

929 F.2d 1169, 1172 (7th Cir. 1991) (holding that the structuring itself, and not each individual deposit, is the unit of

prosecution in a structuring offense), and thus no pattern of

unlawful activity, regardless of the number of deposits or the

amount ultimately deposited. The propriety of the USSG

§ 2S1.3(b)(2) enhancement was extremely germane, because

it not only affected whether Peterson’s sentencing range

would be enhanced pursuant to that section, but also because

it affected whether she was entitled to the safe harbor provision in USSG § 2S1.3(b)(3). Pursuant to the safe harbor provision, Peterson’s offense level would be reduced to level 6

if, among other things, the enhancement of USSG

§ 2S1.3(b)(2) did not apply.

The district court determined that Peterson’s offense was

committed as part of a pattern of unlawful activity involving

more than $100,000.00 in a twelve-month period; so USSG

§ 2S1.3(b)(2) applied, and, as a result, the safe harbor provision in USSG § 2S1.3(b)(3) did not apply. The district court

stated that the USSG § 2S1.3(b)(2) enhancement should not

turn on the number of different places the defendant had

stored her cash, reasoning such a result "bizarre and not

intended." (J.A. 110). Rather, according to the district court,

the pattern of unlawful activity could involve multiple deposits coming from the same source of funds, provided each such

deposit could be prosecuted as unlawful in its own right,

though not necessarily in separate counts. As a result, the dis4 UNITED STATES v. PETERSON

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trict court determined Peterson’s offense level to be 13, and

her sentencing range to be 15 to 21 months’ imprisonment. At

that time, Peterson was sentenced to, among other things,

twelve months’ imprisonment.

On January 27, 2009, the district court entered an order

vacating the sentence imposed and ordered the parties to reappear for sentencing on January 30, 2009, out of concern that

it did not properly apply the Supreme Court’s decision in

Kimbrough v. United States, 552 U.S. 85 (2007). At the January 30, 2009 sentencing, after consideration of the sentencing

range and the other factors set forth at 18 U.S.C. § 3553(a),

the district court sentenced Peterson to, inter alia, eight

months of community confinement with work release. Peterson appeals, challenging the district court’s application of the

USSG § 2S1.3(b)(2) enhancement.

II

For sentencing purposes, structuring offenses are covered

by USSG § 2S1.3. The base offense level for a structuring

offense is 6, plus the number of levels from the Theft Table

at USSG § 2B1.1. USSG § 2S1.3(a)(2). After the base offense

level is calculated, specific offense characteristics come into

play. Two levels are added if (1) the defendant knew or

believed that the structured funds were proceeds of unlawful

activity or were intended to promote such activity or (2) the

offense involved bulk cash smuggling. USSG § 2S1.3(b)(1).

Moreover, two levels are added if the defendant committed

the structuring offense "as part of a pattern of unlawful activity involving more than $100,000 in a 12-month period."

USSG § 2S1.3(b)(2). A pattern of unlawful activity is defined

as "at least two separate occasions of unlawful activity . . . ,

without regard to whether any such occasion occurred during

the course of the offense or resulted in a conviction for the

conduct that occurred on that occasion." USSG § 2S1.3, comment. (n.3). Finally, an offense level is reduced to offense

level 6 under the safe harbor provision, provided: (1) subsecUNITED STATES v. PETERSON 5

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tions (b)(1) and (b)(2) do not apply; (2) the defendant did not

act with reckless disregard of the source of the structured

funds; (3) the funds were the proceeds of lawful activity; and

(4) the funds were used for a lawful purpose. USSG

§ 2S1.3(b)(3).

Peterson argues that, because, per Davenport, she committed only one chargeable offense of structuring, her offense

was not part of a pattern of unlawful activity under USSG

§ 2S1.3(b)(2). More specifically, she argues that, when she

made the eleven deposits, she engaged in only one occasion

of unlawful activity, not multiple occasions of unlawful activity as required by USSG § 2S1.3(b)(2). This argument is

premised on the following language in Davenport, "[t]he statute does not forbid the making of deposits. It forbids the

structuring of a transaction." 929 F.2d at 1171. Consequently,

Peterson claims she was entitled to the safe harbor provision

in USSG § 2S1.3(b)(3), such that her total offense level

should have been 4 (offense level 6 minus a two-level reduction for acceptance of responsibility).

The pattern of unlawful activity enhancement set forth in

USSG § 2S1.3(b)(2) applies in at least three situations, which

is not surprising since USSG § 2S1.3 applies to a variety of

monetary transaction offenses. First, it applies when the occasions of unlawful activity involving more than $100,000.00

are separate from the structuring offense itself. Redefining the

Bank Secrecy Act: Currency Reporting and the Crime of

Structuring, 50 Santa Clara L. Rev. 407, 486 (2010). For

example, structuring is separate from income tax evasion

when the defendant structures a series of deposits to avoid

paying income taxes. Id. Second, the enhancement applies

when the defendant engages in what has been coined as "‘serial structuring.’" Id. Serial structuring refers to a pattern of

structuring activity involving more than $100,000.00 in any

twelve-month period, and applies "even in the absence of

other criminal activity." Id. Typically, serial structuring

involves a series of related currency transaction report viola6 UNITED STATES v. PETERSON

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tions. See, e.g., United States v. St. Michael’s Credit Union,

880 F.2d 579, 587 (1st Cir. 1989) (holding that, to establish

a pattern of unlawful activity in a case involving currency

transaction report violations, the government must prove that

the currency transaction report violations were both repeated

and related to one another). Finally, the pattern of unlawful

activity enhancement applies when the structuring offense

itself involves a pattern of unlawful activity. This situation is

akin to serial structuring, but typically involves a defendant

who structures a series of deposits totaling in excess of

$100,000.00 to avoid triggering the bank’s duty to report (perfect structuring) or in an attempt to defeat the bank’s responsibility to report (imperfect structuring). This final situation

recognizes that some structuring offenses are part of a pattern

of unlawful activity, while others are not. For example, a

structurer who takes $9999.00 from a safe deposit box containing $101,000.00 and is arrested on her first trip to the

bank to deposit the money has not, as the government

acknowledged at oral argument, engaged in a pattern of

unlawful activity under USSG § 2S1.3(b)(2), even though she

may have intended to make ten additional deposits. Similarly,

a structurer who has $101,000.00 in a bedroom closet, makes

the first deposit of $9999.00, and returns home only to find

the remainder of the money stolen has not engaged in a pattern of unlawful activity under USSG § 2S1.3(b)(2). The

same cannot be said for the structurer who is able to make the

other eleven deposits before getting caught. Such a structurer

has committed a series of acts that constitute a pattern of

unlawful activity.

Such a construction of USSG § 2S1.3(b)(2) is consistent

with Application Note 3 to USSG § 2S1.3. In Application

Note 3, "pattern of unlawful activity" is defined as "at least

two separate occasions of unlawful activity involving a total

amount of more than $100,000 in a 12-month period, without

regard to whether any such occasion occurred during the

course of the offense or resulted in a conviction for the conduct that occurred on that occasion." USSG § 2S1.3, comUNITED STATES v. PETERSON 7

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ment. (n.3). As a result, "unlawful activity" that did not occur

during the course of the offense of conviction may trigger the

enhancement, but, in addition, such unlawful activity that

occurs during the course of the offense of conviction may

trigger it as well. Thus, the "pattern of unlawful activity" can

consist solely of conduct that occurred during the course of

the offense, that is, the structured transactions that occurred

during the course of the structuring offense.

Our reading of USSG § 2S1.3(b)(2) is also consistent with

the overall framework of USSG § 2S1.3. Section § 2S1.3 sets

up a graduated punishment scheme that punishes a defendant

primarily on the amount of money involved in the monetary

transaction violation(s) and affords leniency for the defendant

who engages in isolated monetary transactions that do not

cross the $100,000.00 threshold. Generally, the larger the

amount of money involved in the monetary transaction violation(s), the higher the offense level. However, the safe harbor

provision essentially establishes a very narrow opening for a

defendant whose offense is either made up of an isolated

monetary transaction or several monetary transactions that do

not cross the $100,000.00 threshold. A defendant who

engages in multiple transactions and crosses the $100,000.00

threshold simply cannot enter that narrow opening.

Moreover, acceptance of Peterson’s argument leads to

absurd results. For example, under her reading of USSG

§ 2S1.3(b)(2), defendants essentially engaging in the same

conduct would receive dramatically different sentences. For

example, a defendant who has $101,000.00 in a safe deposit

box and, within a one-month month period, breaks it up into

eleven deposits under $10,000.00 is entitled to the safe harbor

provision and receives an offense level of 6. However, a

defendant who has $52,000.00 in cash on Day One and breaks

it up into six deposits under $10,000.00 over the first month

but then acquires another $49,000.00 on Day Five and breaks

that amount into five deposits under $10,000.00 during that

same month would not be entitled to the safe harbor provi8 UNITED STATES v. PETERSON

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sion, but would be assigned an offense level of 14. In both

instances, the defendant structured the same amount of money

in the course of eleven transactions over roughly the same

period of time. Yet, according to Peterson, the second

instance would constitute a "pattern" subject to the enhancement in USSG § 2S1.3(b)(2), but the first would not. We simply cannot embrace such reasoning.

The absurdity does not end there. Embracing Peterson’s

reading of USSG § 2S1.3(b)(2) also needlessly leads to the

divergent sentences for imperfect structuring offenses on the

one hand and perfect structuring offenses on the other. An

imperfect structurer violates § 5324(a)(1) when multiple

deposits are made in the same or different bank accounts at

the same bank on the same day such that the total of the

deposits aggregates to more than $10,000.00. Each day’s

deposits that exceed the $10,000.00 threshold constitute a separate violation of § 5324(a)(1) because the imperfect structurer has attempted to cause the bank to fail to file the

necessary currency transaction report. Thus, under Peterson’s

reading of USSG § 2S1.3(b)(2), the imperfect structurer who

structures $101,000.00 through ten deposits over ten days

would receive an offense level of 14, but the perfect structurer

who structures $101,000.00 through eleven deposits on eleven

separate days would receive an offense level of 6 under the

safe harbor provision. Again, we simply cannot embrace such

anomalies. 

At the end of the day, Peterson’s argument rests on the

statements in Davenport positing that a deposit simply is not

an unlawful act; therefore, according to Peterson, no deposit

can be viewed as an occasion of unlawful activity under

USSG § 2S1.3(b)(2). We are reluctant to take issue with the

decision in Davenport because the court there addressed the

appropriate unit of prosecution in a § 5324(a)(3) structuring

case; it did not address whether the defendant engaged in a

pattern of unlawful activity under USSG § 2S1.3(b)(2). There

are sound reasons supporting the principle that the governUNITED STATES v. PETERSON 9

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ment should refrain from bringing a separate structuring count

for each deposit, especially in cases involving numerous

deposits over an extended period of time. Cf. United States v.

Tran Trong Cuong, 18 F.3d 1132, 1142 (4th Cir. 1994)

(reversing convictions in prescription drug distribution case

where government obtained an indictment containing 136

counts, of which eighty counts were not supported by sufficient evidence; court noted that "[s]uch tactics invite a jury to

find guilt by association or as a result of a pattern"). However,

for purposes of our discussion here, we are of the opinion that

each separate deposit is an unlawful act, as the government

could base a prosecution on any one or all of the deposits, see

31 C.F.R. § 103.11(gg) (defining structuring as one or a series

of transactions). In this regard, a structuring offense is akin to

conspiracy (or other unlawful schemes), where the unlawful

acts are charged as overt acts in the overall conspiracy. Put

simply, because Peterson made more than one unlawful

deposit and the total of her eleven deposits in a twelve-month

period exceeded $100,000.00, she committed her offense as

part of a pattern of unlawful activity under USSG

§ 2S1.3(b)(2).

III

Peterson raises two additional arguments which she contends should be resolved in her favor. First, she contends that

USSG § 2S1.3(b)(2) only applies to willful violations of

§ 5324(a)(3). We reject this argument for the simple reason

that USSG § 2S1.3(b)(2) contains no willfulness component.

Second, Peterson contends the rule of lenity should apply in

this case. We reject this contention because we find no

ambiguity in USSG § 2S1.3(b)(2). See United States v.

Helem, 186 F.3d 449, 455 (4th Cir. 1999) ("The rule of lenity,

which requires the court to strictly construe criminal statutes,

does not apply in this case because the statute is not ambiguous.").

In sum, the district court did not err when it determined that

Peterson’s structuring offense was committed as part of a pat10 UNITED STATES v. PETERSON

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tern of unlawful activity involving more than $100,000.00 in

a twelve-month period, such that the USSG § 2S1.3(b)(2)

enhancement applied and, as a result, the safe harbor of USSG

§ 2S1.3(b)(3) did not apply.

AFFIRMED

UNITED STATES v. PETERSON 11

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