1996 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

2-26-1996

United States v. Alston

Precedential or Non-Precedential:

Docket 94-2195

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1996

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 1996 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"United States v. Alston" (1996). 1996 Decisions. Paper 239.

http://digitalcommons.law.villanova.edu/thirdcircuit_1996/239
1 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

------------ 

No. 94-2195 

------------ 

UNITED STATES OF AMERICA, 

 Appellee

v. 

MICHAEL DAVID ALSTON, 

Appellant

---------- 

On Appeal from the United States District Court 

for the Eastern District of Pennsylvania 

(D.C. Criminal No. 93-cr-00445-1) 

---------- 

Argued Monday, December 11, 19950

BEFORE: ROTH, McKEE and GARTH, Circuit Judges

---------- 

(Opinion filed February 26, l996) 

---------- 

Joel P. Trigiani (Argued) 

1411 Walnut Street, Suite 700 

Philadelphia, PA 19102 

 Attorney for Appellant

 

0This matter was originally heard on June 27, 1995 before Judges 

Hutchinson, Roth, and Garth. Because Judge Hutchinson died prior 

to an opinion being rendered, the Panel was reconstituted to 

include Judge McKee, and the appeal was reargued. 
2 

Michael R. Stiles 

United States Attorney 

Walter S. Batty, Jr. 

Assistant United States 

Attorney, Chief of Appeals 

Joel D. Goldstein (Argued) 

Assistant United States Attorney 

United States Attorney's Office 

Eastern District of Pennsylvania 

615 Chestnut Street, Room 1250 

Philadelphia, PA 19106-4476 

 Attorneys for Appellee

 ---------- 

 OPINION OF THE COURT 

 ---------- 

GARTH, Circuit Judge: 

 On September 30, 1993, defendant Michael David Alston 

("Alston") was indicted on two counts. Count I charged him with 

conspiracy under 18 U.S.C. § 371: (i) to defraud the United 

States and the Treasury and (ii) to structure to avoid the 

reporting requirements of 31 U.S.C. § 5313(a), in violation of 

the anti-structuring provisions of 31 U.S.C. § 5324(a)(3) and 

§ 5322. Count II charged him with structuring in violation of 31 

U.S.C. § 5324(a)(3), § 5322(b); 31 C.F.R. § 103.11, § 103.22; and 

18 U.S.C. § 2(b). Following a non-jury trial, Alston was 

convicted on both counts. 

 After Alston was convicted, the Supreme Court rendered 

its opinion in United States v. Ratzlaf, -- U.S. --, 114 S. Ct. 

655 (1994), in which it held that, in order to obtain a 

structuring conviction, the government must prove that the 
3 

defendant "willfully" structured. "Willfulness" was defined as 

the defendant's knowledge that structuring was illegal. The 

government conceded that it had not proven the mens rea

(knowledge of illegality) that Ratzlaf required in order to 

sustain Count II, the substantive count of structuring and that 

portion of Count I that charged conspiracy to structure. The 

district court therefore vacated those portions of Alston's 

conviction. However, the district court refused to set aside 

Alston's conviction under Count I which charged a § 371 

conspiracy to defraud, reasoning that Ratzlaf's mens rea

requirement did not apply. 

 We have jurisdiction over this appeal pursuant to 28 

U.S.C. § 1291. We will reverse because the indictment, in 

charging under the "defraud" clause of § 371, (Indictment ¶7(a)), 

alleges no more than a conspiracy to defraud the United States by 

structuring, a far different conspiracy than the genre of "Klein 

conspiracies"0 relied on by the government. In addition, we have 

such substantial difficulty in understanding how Alston can be 

convicted of a conspiracy to defraud by structuring when he 

cannot be guilty of a conspiracy to structure or of structuring 

itself,0 that we reverse Alston's conviction. 

 

0A "Klein conspiracy" is discussed at note 13, infra. 

0In this opinion, we discuss only Alston's argument that his §371 

conspiracy must be vacated, as we find no merit in Alston's other 

ground for appeal, i.e., that the district court abused its 

discretion in admitting evidence of Alston's failure to file tax 

returns in 1987 and 1988. 

 Alston had also originally raised a third ground for appeal: 

that the district court had erred in enhancing his offense level 

by two levels for obstruction of justice. However, by letter 

filed February 16, 1995, Alston abandoned this ground for appeal. 
4 

I. 

 On July 28, 1988, Alston, operator of an unprofitable 

convenience store, and his brother Henry each arranged to 

purchase top-of-the-line BMW automobiles from West German Motor 

Imports for approximately $70,000 apiece.0 The sales contract on 

each car provided that a down payment of $41,000 would be paid 

toward the purchase price of the car on or before the date of 

delivery, and that the remainder of the purchase price would be 

financed. The salesman was co-defendant Richard Rosa. Alston 

and his brother each left a personal check for $500 toward their 

respective down payments. 

 Alston's car became available on September 12, 1988. 

Alston made cash remittals to Motor Imports of $5,000 on 

September 30, 1988, $2,500 on October 4, 1988, and $1,500 on 

October 5, 1988, for a total of $9,000 within that week. A 

single $10,000 cash payment would have triggered Motor Imports's 

obligation to file an IRS Form 8300 for cash payments over 

$10,000.0

 

0After factoring in all costs, each vehicle cost approximately 

$83,000. 

0Internal Revenue Code section 6050I requires "[a]ny person . . . 

who is engaged in a trade or business, and who, in the course of 

such trade or business, receives more than $10,000 in cash in 1 

transaction (or 2 or more related transactions)" to file a return 

identifying the person from whom the cash was received, the 

amount of the cash received, and the date and nature of the 

transaction. 26 U.S.C. § 6050I(a), (b). Structuring 

transactions to evade the reporting requirements of § 6050I is 

prohibited. 26 U.S.C. § 6050I(f). 

 Because the statute of limitations for structuring under 

section 6050I had run, Alston was not charged with such a 

violation. 
5 

 On October 5, 1988, Alston paid cash for a $9,000 money 

order payable to Motor Imports from Therese Drew, the head bank 

teller at Stenton Avenue Branch of Meridian Bank and a close 

personal friend of Alston's, who also kept the books for Alston's 

convenience store. At trial, Drew testified that she knew about 

the currency transaction report ("CTR") filing requirements 

imposed by law and had discussed the CTR filing requirements with 

Alston. On October 7, 1988, Alston purchased with cash another 

$8,000 money order payable to Motor Imports from the Stenton 

Avenue Branch of Meridian Bank. 

 A similar pattern was followed for the purchase of 

Henry Alston's BMW, and on December 9, 1988, both Michael and 

Henry Alston took delivery of their new cars. 

 On September 30, 1993, Alston was charged in two counts 

of a three count indictment. Count I charged Alston with 

conspiracy under 18 U.S.C. § 371: (i) to defraud the United 

States and the Treasury and (ii) to structure to avoid the 

reporting requirements of 31 U.S.C. § 5313(a),0 in violation of 

the anti-structuring provisions of 31 U.S.C. § 5324(a)(3)0 and 

 

0In 1970, Congress enacted 31 U.S.C. § 5313(a), which provided 

that financial institutions such as banks are obligated to file 

CTR's for cash transactions in excess of $10,000. See 31 U.S.C. 

§ 5313(a) (reporting requirement); 31 C.F.R. § 103.22(a)(1) 

($10,000 floor). 

0In 1986, Congress enacted an "antistructuring" provision, 31 

U.S.C. § 5324, which provides that no person shall, "for the 

purpose of evading the reporting requirements of section 5313(a) 

. . . structure . . . any transaction with one or more financial 

institutions." 31 U.S.C. § 5324(a)(3). 
6 

§ 5322.0 Count II charged Alston with the substantive offense 

of structuring, that is, evasion of the reporting requirements of 

31 U.S.C. § 5313(a), in violation of the anti-structuring 

provisions of 31 U.S.C. § 5324(a)(3), § 5322(b); 31 C.F.R. 

§103.110, § 103.22;0 and 18 U.S.C. § 2(b).0

 

0 At all times relevant to this appeal, 31 U.S.C. § 5322(a) 

provided criminal penalties only for "willful" violations of 

§ 5313 or 5324. Prior to its amendment in 1994, § 5322 read as 

follows: 

A person willfully violating this subchapter 

[31 U.S.C. § 5311 et seq.] or a regulation 

prescribed under this subchapter (except 

section 5315 of this title or a regulation 

prescribed under section 5315) shall be fined 

not more than $250,000, or imprisoned for not 

more than five years, or both. 

31 U.S.C. § 5322(a). Section 5324 was subsequently amended in 

1994 to provide its own penalty provision. The 1994 amendment 

did not impose a "willfulness" requirement. See n. 12, infra. 

0Section 103.11(gg) of the C.F.R. defines "structuring" as 

follows: 

Structure (structuring). [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 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. 

31 C.F.R. § 103.11(gg). 

0Section 103.22(a)(1) of the C.F.R. provides that "[e]ach 

financial institution other than a casino or the Postal Service 

shall file a report of each deposit, withdrawal, exchange of 

currency or other payment or transfer, by, through, or to such 
7 

 On November 17, 1993, a non-jury trial was held. On 

November 18, 1993, Alston was convicted of all counts. The 

district court sustained Alston's conviction relying on the Third 

Circuit law in effect at that time. Our jurisprudence then 

provided that to obtain a structuring conviction, the government 

need only prove that the defendant knew of the financial 

institution's obligation to report financial transactions of over 

$10,000, and that the defendant structured his transactions in 

order to avoid triggering such reports. See United States v. 

Shirk, 981 F.2d 1382 (3d Cir. 1992), cert. denied, 114 S. Ct. 873 

(1994). The district court concluded that Alston knew of the 

bank's reporting requirements from his conversations with Drew, 

and that he had intentionally structured his transactions to 

avoid having CTR's filed with the IRS. 

 On January 11, 1994, after the trial, but before the 

district court ruled on Alston's post-trial motions, the Supreme 

Court held that in order to obtain a structuring conviction the 

government must prove that the defendant knew that structuring 

itself was illegal. United States v. Ratzlaf, -- U.S. --, 114 S. 

Ct. 655 (1994). 

 Alston moved to set aside the verdict and sought the 

entry of a judgment of acquittal under Rule 29 of the Federal 

 

financial institution which involves a transaction in currency of 

more than $10,000." 31 C.F.R. § 103.22(a)(1). 

0Under 18 U.S.C. § 2(b), a person who causes an act to be done 

which if directly performed by himself would be an offense 

against the United States, is punishable as if he had committed 

the act himself. 18 U.S.C. § 2(b). In this case, Count II of 

the indictment charged Alston under § 2(b) with causing the bank 

to fail in its statutory duty to file CTR's. 
8 

Rules of Criminal Procedure. The government conceded that it had 

not proven knowledge of illegality. It therefore conceded that 

Alston's convictions for structuring and conspiracy to structure 

under § 5324 and § 5322 could not stand. 

 By order filed April 6, 1994, the district court 

granted Alston's post-trial motion to set aside the verdict with 

respect to the substantive count of structuring and so much of 

Count I that had charged conspiracy to structure (Indictment 

¶ 7(b)). The district court entered a judgment of acquittal on 

those charges. The district court refused, however, to set aside 

Alston's conviction under that portion of Count I that had 

charged conspiracy to defraud, (Indictment ¶ 7(a)). It did so on 

the ground that Ratzlaf's mens rea requirement did not apply to 

§ 371 conspiracies to defraud. 

 On November 29, 1994, Alston was sentenced to a term of 

imprisonment of one year and one day for conspiracy to defraud 

the United States, as charged in Count I of the indictment. 

II. 

 Section 5313 of title 31 of the United States Code, and 

31 C.F.R. § 103.22(a)(1) promulgated thereunder, provide that 

banks and other "financial institutions" must file CTR's for cash 

transactions of $10,000 or more. In 1986, Congress enacted 31 

U.S.C. § 5324 and § 5322 as part of the Anti-Drug Abuse Act of 

1986. Section 5324 provides that it is illegal for an individual 

to "structure," that is, to conduct one or more cash transactions 

at one or more financial institutions, for purposes of evading 
9 

the financial institution's reporting requirements under 31 

C.F.R. § 103.22. Structuring includes reducing a sum of cash 

exceeding $10,000 into smaller sums. Because, prior to 1994, 

section 5324 did not itself contain a penalty provision, its 

penalty provision was supplied by section 5322(a), which provided 

that "a person willfully violating" section 5324 was subject to 

criminal penalties. 

 We originally interpreted the term "willful" in 

§ 5322(a) to mean knowledge of the bank's reporting requirements 

under § 5313 coupled with the intent to evade those requirements. 

United States v. Shirk, 981 F.2d 1382, 1390-92 (3d Cir. 1992). 

However, in Ratzlaf v. United States, -- U.S. --, 114 S. Ct. 655 

(1994), the Supreme Court held that the term "willful" in 

§ 5322(a) required proof beyond knowledge of a bank's reporting 

duties and intent to evade them. Ratzlaf for the first time 

required that the government prove that the defendant "knew the 

structuring in which he engaged was unlawful." Ratzlaf, -- U.S. 

at --, 114 S. Ct. at 663 (emphasis added). Thus, at all times 

relevant to this appeal, structuring was one of the few crimes 

for which the government had to prove knowledge of illegality. 

See United States v. Zehrbach, 47 F.3d 1252, 1261 (3d Cir. 1995), 

cert. denied, 115 S. Ct. 1699 (1995).0

 

0After the Supreme Court decided Ratzlaf, Congress eliminated the 

willfulness requirement for structuring convictions by amending 

18 U.S.C. § 5324 to contain its own criminal penalty provision. 

The penalty provision of § 5324, unlike § 5322, does not require 

willfulness. 1994 Riegle Community Development and Regulation 

Improvement Act, Pub. L. No. 103-325, § 411, 108 Stat. 2253 

(1994). Thus, following the 1994 amendment, the mens rea

requirement for a structuring conviction is met if the government 
10 

 As earlier noted, the government conceded following 

trial that it had failed to prove that Alston knew it was illegal 

to avoid CTR's, and agreed that Alston's convictions for the 

substantive offense of structuring and conspiracy to structure 

should be vacated. However, the government maintained that 

Alston's structuring may nonetheless be punished as the object of 

a "Klein conspiracy"0 under the "defraud" clause of 18 U.S.C. 

§ 371. The district court agreed and declined to vacate the 

charge against Alston for conspiracy to defraud the United States 

under § 371. 

III. 

 Section 371, the general federal conspiracy statute, 

provides as follows: 

If two or more persons conspire either to 

commit any offense against the United States, 

or to defraud the United States, or any 

agency thereof in any matter for any purpose, 

and one or more of such persons do any act to 

effect the object of the conspiracy each 

shall be [subject to criminal penalties]. 

 

merely establishes that the defendant had the purpose of causing 

a financial institution to not file a required report. 

 In light of the 1994 amendment to § 5324, we observe that 

the instant situation is unlikely to occur again. 

0The term "Klein conspiracy" comes from the Second Circuit case 

of United States v. Klein, 247 F.2d 908 (2d Cir. 1957), and has 

become the generic term for a conspiracy to frustrate the 

government (particularly the IRS) in its lawful information 

gathering functions. See, e.g. United States v. Montalvo, 820 

F.2d 686 (5th Cir. 1987) (defendant convicted under the defraud 

clause of § 371 for conspiracy to impede the IRS in the 

ascertainment and collection of revenue by laundering money in 

order to disguise the true source of United States currency). 
11 

18 U.S.C. § 371. Section 371 refers to two types of 

conspiracies: (1) conspiracy to commit a substantive offense 

proscribed by another statute (the ""offense" clause"); and (2) 

conspiracy to defraud the United States (the ""defraud" clause"). 

See United States v. Vazquez, 319 F.2d 381, 384 (3d Cir. 1963). 

While the "offense" clause requires reference to another part of 

the criminal code, the "defraud" clause does not, simply because 

the substantive offense (fraud) is contained in the statute 

itself. 

 It is well settled that to convict a defendant of 

conspiracy under the "offense" clause, the government must prove 

whatever level of mens rea is required for conviction of the 

underlying substantive offense. The Supreme Court has made clear 

that "in order to sustain a judgment of conviction on a charge of 

conspiracy to violate a federal statute [under the "offense" 

clause of § 371], the Government must prove at least the degree 

of criminal intent necessary for the substantive offense itself." 

United States v. Feola, 420 U.S. 671, 685-86 (1975) (citing 

Anderson v. United States, 417 U.S. 211, 226 (1974)).0

 In order to convict a pre-1994 structuring defendant, 

the government must prove "willful" violation of the antistructuring statute, that is, knowledge of the illegality of 

structuring, Ratzlaf v. United States, -- U.S. --, 114 S. Ct. 655 

(1994). A pre-1994 conspiracy to structure must also be 

 

0As Justice Jackson once stated, conspiracy, "chameleon-like, 

takes on a special coloration from each of the many independent 

offenses on which it may be overlaid." Krulewitch v. United 

States, 336 U.S. 440, 447 (1940). 
12 

dismissed absent a showing of a "willful" violation. Thus, "it 

is necessary to establish knowledge of the illegality of 

structuring in order to convict a defendant for conspiracy to 

structure financial transactions." United States v. Kim, 65 F.3d 

123, 126 (9th Cir. 1995) (reversing conviction for conspiracy to 

structure where the jury was not instructed to find that the 

defendant had knowledge of the illegality of structuring). It 

was obviously for these reasons that the district court in the 

instant pre-1994 case dismissed the substantive charge of 

structuring as well as the charge of § 371 conspiracy to 

structure. 

 After the district court dismissed all but the charge 

of § 371 conspiracy to defraud, of which Alston was convicted, 

the issue then remaining before us was whether Alston, in light 

of Ratzlaf's pre-1994 standard of willfulness -- a standard since 

amended (see footnote 12, supra) -- could be convicted of a 

conspiracy to defraud by structuring without proof of knowledge 

of illegality. In United States v. Curran, 20 F.3d 560 (3d Cir. 

1994), we answered that question in connection with the Federal 

Election Campaign Act. We held that the standard that applied to 

the substantive offense also applied to § 371 conspiracy to 

defraud. Here, we answer that question consistent with Curran's 

principle and holding and require that a conviction to defraud 

the United States by pre-1994 structuring must also be supported 

by proof that the defendant knew that structuring was illegal.0

 

0Judge Roth, writing in dissent (dissent typescript page 24) 

claims that we have misread United States v. Curran, 20 F.3d 560 
13 

 The defendant in Curran had asked his employees to make 

individual contributions to the election campaigns of certain 

candidates for federal office. He then reimbursed them in cash, 

thereby circumventing the maximum campaign contributions 

permitted to any individual under federal law. Following trial, 

Curran was convicted on charges of causing election campaign 

treasurers to submit false reports to the Federal Election 

Commission (the "FEC"), in violation of 18 U.S.C. § 2(b) and 

§ 1001,0 and of conspiracy to defraud the United States under 

§ 371. 

 Like the antistructuring statutes, § 1001 punishes only 

"willful" conduct. We held that "willfully" causing a violation 

of the disclosure obligations under the Federal Campaign Act, was 

no different than "willfully" causing the failure by a bank to 

 

(3d Cir. 1994). She charges that our reading of Curran would 

lead to a conflict with United States v. Vasquez, 319 F.2d 381 

(3d Cir. 1963). 

 Vasquez, however, said no more than: "[t]he latter 

conspiracy [to defraud the United States] is itself the 

substantive offense, and a count of an indictment drawn under it 

need refer to no other statute than § 371" -- a statement to 

which we have referred in text, supra, at page 11. 

 Curran, therefore, cannot conflict with Vasquez: first, 

because the Vasquez statement is dicta and second, because each 

of the two cases deals with vastly different subject matters and 

with vastly different principles. Hence, neither Vasquez nor any 

other authority cited by the dissent trenches upon the principle 

that where the Supreme Court or Congress has identified and 

specifically considered particular conduct and has ruled 

specifically with respect to that conduct, as the Supreme Court 

has ruled in Ratzlaf, effect must be given to the ruling and 

standard prescribed not only for the specific offense but also 

for the conspiracy to commit that offense. 

0Section 1001 prohibits the making of a false statement or the 

concealment of a material fact within the jurisdiction of a 

department or agency of the United States. 18 U.S.C. § 1001. 
14 

file a CTR under the Bank Secrecy Act. Curran, 20 F.3d at 568-

69. Thus, applying Ratzlaf, we defined "willfulness" in cases 

brought under § 2(b) and § 1001 in the Federal Election law 

context to require the prosecution to prove "that defendant knew 

of the treasurers's reporting obligations, that he attempted to 

frustrate those obligations, and that he knew his conduct was 

unlawful." Curran, 20 F.3d at 569. 

 Because the Curran court's "willfulness" instruction 

was legally deficient in that it did not charge the jury that 

Curran had to have knowledge of the illegality of his actions, we 

vacated Curran's convictions on the substantive counts, 18 U.S.C. 

§ 2(b) and 18 U.S.C. § 1001. Most significantly, however, we 

vacated Curran's § 371 "conspiracy to defraud" conviction because 

critical aspects of Curran's mens rea were lacking, including 

proof that he knew his actions to be illegal. We held that the 

district court's misstatement of the legal standard for 

"willfulness" "undermined not only the substantive counts, but 

the conspiracy [to defraud] one as well. The essence of 

conspiracy is an agreement to commit an act that is illegal." 

Curran, 20 F.3d at 571. "The comments we have previously made 

about the failings of the instruction on intent apply to the 

conspiracy [to defraud] count as well." Id. "On retrial, the 

instruction on intent as to the conspiracy count must track those 

applicable to the substantive counts." Id. (quoting United 

States v. American Investors of Pittsburgh, Inc., 879 F.2d 1087, 

1100 (3d Cir.), cert. denied, 493 U.S. 955 (1989)). 
15 

 Both logic and our decision in Curran dictate our 

holding here. The government in this case has conceded that it 

has failed to prove that Alston "willfully" structured under 

Ratzlaf. Therefore, the charge against Alston for conspiracy to 

defraud, which was premised exclusively on Alston's structuring 

activity, must be vacated for failure to prove the mens rea

(knowledge of illegality) required not only by the underlying 

substantive offense of structuring, but also by the conspiracy to 

defraud by structuring. 

 In the present case, the indictment, in charging Alston 

with conspiracy to defraud, relied exclusively on allegations of 

his structuring activity. The indictment reads in relevant part: 

 From on or about July 28, 1988 to on or 

about December 9, 1988 in the Eastern 

District of Pennsylvania, defendants 

MICHAEL DAVID ALSTON, and 

RICHARD ROSA 

did knowingly, willfully and unlawfully 

conspire, combine, confederate, and agree 

together with an unindicted co-conspirator, 

and others unknown to the grand jury: 

 a. to defraud the United States and 

the Department of the Treasury, an agency of 

the United States, by impairing, obstructing, 

and defeating its lawful governmental 

function of collecting data and reports of 

currency transactions in excess of $10,000; 

and 

 b. to knowingly and willfully 

structure, and attempt, aid, abet and cause 

the structuring of, financial transactions 

with a domestic financial institution for the 

purpose of evading the reporting requirements 

of 31 U.S.C. § 5313(a), in violation of 31 

U.S.C. § 5324(a)(3). 
16 

 "Structuring" entails the breaking down 

of large amounts of U.S. currency into 

smaller amounts of less than $10,000 

preliminary to transacting business with a 

financial institution in an attempt to avoid 

the CTR reporting requirements. 

Indictment ¶ 7 (emphasis added). 

 The indictment, in charging conspiracy to defraud, 

asserts only that Alston impaired the United States and Treasury 

"in its lawful governmental function of collecting data and 

reports of currency transactions in excess of $10,000," language 

that sounds in structuring. Indeed, the entire indictment speaks 

only to structuring activities and contains no allegations that 

Alston defrauded the government in any other respect. Because 

the indictment is narrowly drawn to rest solely on the alleged 

facts of structuring, and because it is conceded that Alston 

lacked the requisite mental state to be guilty of structuring, 

Alston's conviction on unspecified broader grounds cannot be 

sustained. See United States v. Murphy, 809 F.2d 1427, 1432 (9th 

Cir. 1987) (where indictment was narrowly drawn to state that 

defendants conspired to defraud the IRS in its collection of 

information with regard to currency transactions, the defendant 

could not be convicted of conspiracy to defraud based on his 

money laundering operations). 

 Moreover, the government has conceded that its theory 

against Alston for fraud against the United States is nothing 

more than structuring. See Gov't Supp. Mem, June 30, 1995 at 2 

("[T]he basis for our definition of the underlying legal 

obligation/legal prohibition to make out a case of an agreement 
17 

to defraud the government is found at 31 U.S.C. § 5324(a)(3)."). 

As a consequence, the government offered the same body of 

evidence at trial to support both the charge against Alston for 

"conspiracy to defraud" and the charge against him for 

"conspiracy to structure." The government neither charged, nor 

attempted to prove at trial, that Alston engaged in any 

fraudulent activity separate from, or in addition to, what can 

only be characterized as "structuring." 

 Despite this concession and the proof at trial, and 

even though the only charges found in the indictment describe the 

act of structuring, the government argues that Alston's 

"conspiracy to defraud" conviction did not require proof of the 

"willfulness" required for a structuring conviction. The 

government contends instead that Alston was guilty of 

participating in a so-called "Klein conspiracy" "to defraud the 

United States by obstructing or impeding the IRS in its functions 

and duties under the Bank Secrecy Act to collect analyze, and 

disseminate information contained in CTR reports." (Appellee's 

Brief at 11).0 Because establishing a true Klein conspiracy 

 

0As previously explained, supra at 10 n.13, the term "Klein 

conspiracy" is derived from United States v. Klein, 247 F.2d 908 

(2d Cir. 1957), cert. denied, 355 U.S. 924 (1958). A Klein 

conspiracy is comprised of three elements: "(1) the existence of 

an agreement, (2) an overt act by one of the conspirators in 

furtherance of the [agreement's] objectives, and (3) an intent on 

the part of the conspirators to agree, as well as to defraud the 

United States." United States v. Shoup, 608 F.2d 950, 956 (3d 

Cir. 1979). Several courts have sustained Klein convictions when 

the evidence sufficed to prove an accompanying "intent and 

purpose of impeding and obstructing the IRS in the collection of 

revenue and the performance of its duties." U.S. v. Vogt, 910 

F.2d 1184, 1203 (4th Cir. 1990), cert. denied, 498 U.S. 1083 

(1991). See United States v. Montalvo, 820 F.2d 686, 690 (5th 
18 

under the "defraud" clause does not generally require proof of 

knowledge of illegality, the government contends that its proof 

that Alston knew of the bank's CTR filing requirements is a 

sufficient showing of mens rea to sustain his conviction for 

conspiracy to defraud. 

 We cannot discern any difference between the 

government's "defraud" scenario and the "structuring" scenario of 

which Alston was acquitted. Both conspiracies involve 

structuring prior to the 1994 amendment to § 5324. Therefore, 

given the indictment and the proofs at trial, we conclude that to 

obtain a conviction under either the "defraud" or "offense" 

clause of § 371, the government had to prove that Alston knew 

that his structuring activities were illegal. See Ratzlaf, 

supra. Although we do not foreclose the possibility of 

convicting a defendant under § 371's "defraud" clause based on 

charges in addition to or different from pre-1994 acts of 

structuring, as we have just discussed, the present indictment, 

under paragraph 7(a), charged no more or less than a straight-out 

structuring conspiracy. 

 Notably, the cases that have upheld convictions for 

conspiracy to defraud under § 371 have all involved additional 

charges in the indictment and additional evidence produced at 

trial, over and beyond that required for a conviction for pre1994 structuring. For instance, in United States v. Jackson, 33 

F.3d 866 (7th Cir. 1994), cert. denied, 115 S. Ct. 1316 (1995), 

 

Cir. 1987); United States v. Browning, 723 F.2d 1544 (11th Cir. 

1984). 
19 

the Seventh Circuit affirmed the defendants' convictions for 

conspiracy to defraud under § 371 despite reversing their 

antistructuring convictions. 

 In Jackson, however, the indictment, in charging the 

§ 371 "defraud" count, "never mentions a structuring violation or 

the relevant antistructuring statutes." Id. at 870. Furthermore, 

Jackson involved extensive "other evidence" beyond structuring 

activity demonstrating a conspiracy to defraud the United States, 

id. at 868, including record evidence that the defendants had no 

wage or other income, id. at 869, and yet had spent over $300,000 

to purchase homes and exotic automobiles. Id. at 869. 

 Because, in the present case, the charge against Alston 

for "conspiracy to defraud" was nothing more than a charge of 

conspiracy to structure, we will reverse Alston's conviction 

where his conviction was not based on proof that he had 

"willfully" structured, as required under Ratzlaf. Where either 

Congress or the Supreme Court has spoken on the required level of 

mens rea required to obtain a conviction for structuring, the 

government may not subvert that mandate by juggling the "defraud" 

and "offense" clauses of § 371 so as to substitute one for the 

other. 

 If the "offense" clause of § 371 specifically covers an 

act or offense and the indictment charges only that act or 

offense as having been committed, and the proofs at trial reveal 

no more than such acts of offense, a defendant not guilty under 

the "offense" clause cannot alternatively be convicted under the 

broad "defraud" clause of § 371. 
20 

IV. 

 Because the indictment here charged no more than a 

conspiracy to defraud the United States by structuring and the 

proofs at trial established no more than a conspiracy to defraud 

the United States by structuring, we will reverse Alston's 

conviction. 

ALSTON 

94-2195

Roth, Circuit Judge: Dissenting 

 Appellant Michael David Alston appeals his conviction 

of conspiracy to defraud the United States and the Department of 

the Treasury in violation of 18 U.S.C. § 371. The district court 

found that Alston engaged in a Klein conspiracy with the intent 

to "impair, obstruct and defeat the lawful government function of 

collecting data and reports of currency transactions" by 
21 

arranging his bank transactions to avoid the reporting 

requirements of 31 U.S.C. § 5313(a) and 31 C.F.R. § 103.22(a)(1). 

United States v. Alston, Crim. No. 93-445-1 at 11 (Apr. 6, 1994); 

Appellant's App. at 41. Because I believe that the evidence is 

sufficient to support a conviction for violation of 18 U.S.C. 

§371, I would affirm the district court. Therefore, I dissent. 

 The majority believes that because the conviction for 

conspiracy to defraud the United States is "premised exclusively 

on Alston's structuring activity," the government must 

demonstrate the same mens rea for a conviction under 18 U.S.C. 

§371 as is necessary for a conviction under 31 U.S.C. § 5322. 

Majority Op. at ___ [slip op. at 15]. I disagree. 

 Section 5322 requires that a defendant "willfully" 

commit a violation. The Supreme Court has interpreted this 

"willfulness" requirement to mean that a defendant who 

intentionally commits unlawful acts must also have known that his 

actions were unlawful. Ratzlaf v. United States, ___ U.S. ___, 

114 S.Ct. 655, 657, 663 (1994). Section 371, in contrast, 

imposes no such "willfulness" requirement, and we should not 

create one. As we stated in United States v. Vazquez, a § 371 

conspiracy to defraud "is itself a substantive offense, and a 

count of an indictment drawn under it need refer to no other 

statute than § 371." 319 F.2d 381, 384 (3d Cir. 1963). Thus 

there is no logical reason to apply the willfulness requirement 

contained in § 5322 when § 371 encompasses the entire statutory 

charge against Alston. 
22 

 The government, having failed to prove the requisite 

mens rea for conviction under one statute, 31 U.S.C. § 5322, has 

obtained a conviction under another more general statute, 18 

U.S.C. § 371. Section 371 requires only a showing that Alston 

intentionally committed unlawful acts -- not a showing that he 

knew his actions to be unlawful. The fact that the two charges 

are premised on the same factual scenario is of no legal 

significance in this case. There is nothing unusual or improper 

in the government's alternative characterization of the same 

facts, so long as both theories are alleged in the indictment, as 

they were here. Indictment, Count I at ¶ 7(a)-(b); App. at 12a; 

Id. at Count II, ¶ 2; App. at 17a. 

I

 Alston was originally convicted on two counts of a 

three count indictment. Count I charged Alston in two subparts 

with conspiracy to defraud the United States and the Department 

of the Treasury in violation of 18 U.S.C. § 371 and with 

conspiracy to structure for the purpose of evading the reporting 

requirements of 31 U.S.C. § 5313(a).0 Alston, Crim. No. 93-445-1 

 

0 Count I reads in pertinent part: 

7. From on or about July 28, 1988 to on or about 

December 9, 1988 in the Eastern District of 

Pennsylvania, defendants 

MICHAEL DAVID ALSTON, and 

RICHARD ROSA 

did knowingly, willfully and unlawfully conspire, 

combine, confederate, and agree together with an 

unindicted co-conspirator, and others unknown to the 

grand jury: 
23 

at 1; Appellant's App. at 31; Indictment, Count I at ¶7(a)-(b); 

App. at 12a. Count II charged Alston with "structuring" a 

financial transaction in violation of 31 U.S.C. §5324(a)(3). 

Alston, Crim. No. 93-445-1 at 1; Appellant's App. at 31; 

Indictment, Count II at ¶ 2; App. at 17a. 

 The structuring and conspiracy to structure charges 

were prosecuted pursuant to 31 U.S.C. § 5322, which provided that 

defendants must be convicted of "willfully violating" the antistructuring laws.0 At the time of Alston's indictment and trial, 

we interpreted the "willfulness" mens rea requirement in §5322 to 

mean that a defendant had to have "knowledge of the legal 

reporting requirements and the intent to prevent the bank from 

furnishing the required information." United States v. Shirk, 981 

F.2d 1382, 1391-92 (3d Cir. 1992) (footnote omitted), vacated, 

___ U.S. ___, 114 S.Ct. 873 (1994) (citing Ratzlaf v. United 

 

 a. to defraud the United States and the 

Department of the Treasury, an agency of the 

United States, by impairing, obstructing, and 

defeating its lawful governmental function of 

collecting data and reports of currency 

transactions in excess of $10,000 . . .. 

 b. to knowingly and willfully structure, and 

attempt, aid, abet and cause the structuring of, 

financial transactions with a domestic financial 

institution for the purpose of evading the 

reporting requirements of 31 U.S.C. § 5313(a), in 

violation of 31 U.S.C. § 5324(a)(3). 

Indictment, Count I at ¶ 7; App. at 12a. 

0 Section 5324 has since been amended to add a criminal penalty 

provision so that a prosecution can now be brought directly under 

that statute without reference to § 5322. See United States v. 

Zehrbach, 47 F.3d 1252, 1262 n.7 (3d Cir. 1995) (citing 1994 

Riegle Community Development and Regulation Improvement Act, 

Pub.L. No. 103-325, § 411, 108 Stat. 2253 (1994)). 
24 

States. ___ U.S. ___, 114 S.Ct. 655 (1994)). The government did 

not have to prove that the defendant knew that he was violating 

the law by structuring his transactions. 

 After the conclusion of Alston's bench trial, the 

Supreme Court decided Ratzlaf v. United States. ___ U.S. ___, 

114 S.Ct. 655 (1994). Ratzlaf interpreted the word "willfully" 

as it then appeared in 31 U.S.C. § 5322 to require that the 

government show not only that a defendant intended to circumvent 

a bank's obligation to report currency transactions but that the 

defendant knew that his efforts to circumvent those requirements 

were unlawful. Id. at 657, 663. In light of Ratzlaf, Alston 

filed post-trial motions to set aside his convictions. The 

district court, with the government's acquiescence, vacated the 

structuring charge in Count II and the conspiracy to structure 

charge in Count I and acquitted Alston of these crimes. 

 Despite Ratzlaf, the district court affirmed Alston's 

conviction for conspiracy to defraud the United States and the 

Treasury Department in violation of 18 U.S.C. § 371. The court 

held that Alston was "a co-conspirator in a scheme to prevent the 

United States from receiving information to which it is entitled 

when a bank files a CTR . . .." Alston, Crim. No. 93-445-1 at 

14; Appellant's App. at 44. The court distinguished Ratzlaf "on 

the basis that its analysis of the willfulness element centers on 

the use of the term 'willfully' in the antistructuring statute 

found at 31 U.S.C. §§ 5322(b) and 5324(a)(3)." Id.0 Because 

 

0 As the majority notes, 31 U.S.C. § 5322 imposed criminal 

penalties only for "willful" violations of §§ 5313 or 5324 at all 
25 

§371 does not contain an analogous willfulness element, the court 

did not require proof that Alston knew that his actions were 

unlawful. 

 The district court's analysis is clearly correct. At 

the time Alston was charged and convicted, the relevant portion 

of § 371 provided as follows: 

If two or more persons conspire either to commit any 

offense against the United States, or to defraud the 

United States, or any agency thereof in any matter for 

any purpose, and one or more of such persons do any act 

to effect the object of the conspiracy, each shall be 

fined not more than $10,000 or imprisoned not more than 

five years, or both. 

18 U.S.C. § 371. In United States v. Vazquez, we explained that 

this general conspiracy statute 

condemns two types of conspiracies: One, to commit 

substantive offenses against the United States 

specified under other statutes. The other to defraud 

the United States. The latter conspiracy is itself the 

substantive offense, and a count of an indictment drawn 

under it need refer to no other statute than § 371.

319 F.2d at 384 (emphasis added) (citing Glasser v. United 

States, 315 U.S. 60, 67 (1942)); see also United States v. 

Jackson, 33 F.3d 866, 870 (7th Cir. 1994) (citing United States 

v. Caldwell, 989 F.2d 1056, 1059 (9th Cir. 1993); United States 

 

times relevant to this appeal. Prior to its amendment in 1994, 

§5322 read as follows: 

A person willfully violating this subchapter [31 U.S.C. 

§ 5311 et seq.] or a regulation prescribed under this 

subchapter (except section 5315 of this title or a 

regulation prescribed under section 5315) shall be 

fined not more than $250,000, or imprisoned for not 

more than five years, or both. 

31 U.S.C. § 5322(a). 
26 

v. Bucey, 876 F.2d 1297, 1312 (7th Cir. 1989), cert. denied, 493 

U.S. 1004 (1989); United States v. Rosengarten, 857 F.2d 76, 78 

(2d Cir. 1988), cert. denied, 488 U.S. 1011, (1989)); United 

States v. Vogt, 910 F.2d 1184, 1200 (3d Cir. 1990), cert. denied, 

498 U.S. 1083 (1991). 

 Section 371 "reaches 'any conspiracy for the purpose of 

impairing, obstructing or defeating the lawful function of any 

department of Government.'" Dennis v. United States, 384 U.S. 

855, 861 (1966) (citations omitted). Klein conspiracies, for 

example, may be prosecuted under the "defraud" clause of § 371. 

See United States v. Tarnopol, 561 F.2d 466, 474-75 (3d Cir. 

1977) (acquitting defendants of Klein conspiracy because there 

was no basis for jury finding of intent "to impede and obstruct 

the functions of the Internal Revenue Service"); United States v. 

Klein, 247 F.2d 908 (2d Cir. 1957), cert. denied, 355 U.S. 924 

(1958), and cert. denied sub nom., Haas v. United States, 355 

U.S. 924 (1958), and cert. denied sub nom., Alprin v. United 

States, 355 U.S. 924 (1958); see also United States v. 

Derezinski, 945 F.2d 1006, 1010 (8th Cir. 1991); United States v. 

Farm & Home Savings Assoc., 932 F.2d 1256, 1260 (8th Cir. 1991), 

cert. denied sub nom., Meyer v. United States, 502 U.S. 860 

(1991), and cert. denied sub nom., Williams v. United States, 502 

U.S. 860 (1991); United States v. Cambara, 902 F.2d 144, 145-47 

(1st Cir. 1990). 

 Klein conspiracies are conspiracies to defraud the 

United States by obstructing or impeding the Internal Revenue 

Service in the collection of taxes or in its lawful functions and 
27 

duties to collect, analyze, and disseminate information contained 

in CTRs. Derezinski, 945 F.2d at 1010; Farm & Home Savings 

Assoc., 932 F.2d at 1260; Cambara, 902 F.2d at 145-47. A Klein

conspiracy consists of three elements: "(1) the existence of an 

agreement, (2) an overt act by one of the conspirators in 

furtherance of the [agreement's] objectives, and (3) an intent on 

the part of the conspirators to agree, as well as to defraud the 

United States." United States v. Shoup, 608 F.2d 950, 956 (3d 

Cir. 1979). Knowledge of illegality is not an element of a Klein

conspiracy. As the majority concedes, a conviction under the 

"defraud" clause of 18 U.S.C. § 371 requires a lesser showing of 

intent than does a conviction under 31 U.S.C. § 5322. Majority 

Op. at ___ [slip op. at 17-18] ("establishing a true Klein

conspiracy under the 'defraud' clause does not generally require 

proof of knowledge of illegality . . .."). 

 The district court convicted Alston of a Klein

conspiracy based upon several transactions conducted by or on 

behalf of Alston between October 5 and October 7, 1988. On 

October 5, Alston purchased from Meridian Bank a $9,000 money 

order payable to West German Motor Imports to be used toward the 

purchase of a new BMW. On October 6, 1988, Alston had coconspirator Rosa purchase from Provident National Bank a $6,000 

cashiers check payable to West German. The following day, 

October 7, 1988, Alston purchased with cash an $8,000 money order 

payable to West German from Meridian Bank. That same day, Alston 

purchased a second money order at Meridian Bank for $6,500 with a 

cash advance from a credit card. All of these negotiable 
28 

instruments were delivered to West German and credited toward 

Alston's purchase of the BMW.0

 Alston conducted three of these four transactions 

through Terese Drew, a bank teller at Meridian Bank. Drew, who 

became head teller at Meridian in 1986 or 1987, described herself 

as a "very close friend" of Alston. Drew knew about the CTR 

reporting requirements imposed by law. The district court 

concluded that Drew discussed the CTR requirements with Alston 

some time before the events that led to the indictment. The 

court discounted Drew's statement that she did not believe that 

Alston knew of the CTR requirements because "it appeared to be 

part of her attempt to protect the defendant and it was asking 

her to speculate as to the defendant's state of mind." Alston, 

Crim. No. 93-445-1 at 10 n.5; Appellant's App. at 40. 

 Furthermore, the parties stipulated that Alston failed 

to file income tax returns for the calendar years 1987 and 1988. 

Based upon this evidence, the district court concluded that 

Alston arranged his transactions because "he did not want his 

name called to the attention of the Internal Revenue Service as 

someone who was financially capable of making large cash payments 

but nevertheless had failed to file income tax returns." Id. at 

11; Appellant's App. at 41. 

 

0 Alston presumably paid West German in negotiable instruments in 

order to avoid triggering West German's duty to file an IRS Form 

8300 reporting a series of cash transactions in excess of 

$10,000. No criminal indictment was brought for failure to file 

8300 forms because the applicable three year statute of 

limitations for this offense had already run. 
29 

 The district court summarized its understanding of 

these facts as follows: 

The circumstantial evidence presented at trial shows 

that the overt acts were done willfully and resulted in 

the bank failing to file CTRs because the transactions 

occurred on separate days and at separate banks in 

amounts less than $10,000 and were done with the 

purpose of preventing CTRs from being filed. 

Id. at 14; Appellant's App. at 44. Thus the district court found 

all three elements necessary for conviction of a Klein conspiracy 

under 18 U.S.C. § 371: (1) an agreement between Alston and Rosa, 

(2) "overt acts" in furtherance of that agreement, and (3) an 

intent to defraud the United States of the CTRs to which it was 

entitled under 31 U.S.C. § 5313(a) and 31 C.F.R. § 103.22(a)(1). 

 Alston possessed the requisite mens rea for a § 371 

conviction because these overt acts were done "with the purpose 

of preventing CTRs from being filed." No other mens rea is 

necessary for conviction. As the majority itself acknowledges, 

"[s]everal courts have sustained Klein convictions when the 

evidence sufficed to prove an accompanying 'intent and purpose of 

impeding and obstructing the IRS in the collection of revenue and 

the performance of its duties.'" Majority Op. at ___ [slip op. 

at 18 n.16] (citing United States v. Vogt, 910 F.2d at 1203; 

United States v. Montalvo, 820 F.2d 686, 690 (5th Cir. 1987); 

United States v. Browning, 723 F.2d 1544 (11th Cir. 1984)). 

 Ratzlaf is inapposite because it discusses a different 

statute with a different mens rea requirement. The Supreme Court 

stressed in Ratzlaf itself that it did not discard "the venerable 

principle that ignorance of the law generally is no defense to a 
30 

criminal charge." Ratzlaf, 114 S.Ct. 655, 663 (1994). The Court 

simply made an exception in one instance pursuant to a specific 

decree from Congress. Id. Because there is no "willfulness" 

requirement in § 371, Ratzlaf does not apply, and the government 

is not required to prove that Alston knew that his actions were 

illegal. The majority should not graft an additional mens rea

requirement onto § 371 when it is warranted by neither the words 

of the statute nor Supreme Court precedent. 

II

 To understand how the majority came to impose this 

additional mens rea requirement on a § 371 conspiracy to defraud 

case, it is helpful to examine the majority's general approach to 

the issue. The majority reverses Alston's conviction for 

conspiracy to defraud the United States because it has 

"substantial difficulty in understanding how Alston can be 

convicted of a conspiracy to defraud by structuring when he 

cannot be guilty of a conspiracy to structure or of structuring 

itself . . .." Majority Op. at ___ [slip op. at 3-4] (footnote 

omitted). The majority never lays the facts of this case and the 

elements of a Klein conspiracy side by side to determine whether 

the facts satisfy the elements necessary for conviction under 18 

U.S.C. § 371.0 Instead, the majority emphasizes the similarity 

between the factual scenario supporting the structuring and 

conspiracy to structure charges and the factual scenario 

 

0 When the majority does address the government's Klein

conspiracy theory, it does so in a perfunctory manner, dismissing 

it as "a far different conspiracy" than the one alleged in the 

indictment. Majority Op. at ___ [slip op. at 3]. 
31 

supporting the conspiracy to defraud charge -- a consideration 

that I believe is irrelevant. 

 The majority opinion proceeds along two closely linked 

lines of reasoning. First, the majority identifies a perceived 

deficiency in the indictment. According to the majority, the 

indictment does not adequately allege a Klein conspiracy 

independently of the structuring and conspiracy to structure 

charges. See Majority Op. at ___ [slip op. at 3]; see also Id.

at ___ [slip op. at 16]. Second, the majority argues that Alston 

cannot be convicted of a conspiracy to defraud the United States 

based upon the same factual scenario used to support the 

unsuccessful structuring and conspiracy to structure charges. 

Majority Op. at ___ [slip op. at 3-4, 15, 17-20]. I will address 

these contentions in turn. 

The Indictment

 Count I of the indictment clearly indicates the 

government's intention to seek a conviction of Alston under 18 

U.S.C. § 371. The language in the indictment mirrors relevant 

statutory and judicial pronouncements on § 371 and Klein

conspiracies. The indictment alleges in pertinent part that 

Alston and Rosa conspired 

a. to defraud the United States and the Department of 

the Treasury, an agency of the United States, by 

impairing, obstructing, and defeating its lawful 

governmental function of collecting data and reports of 

currency transactions in excess of $10,000 . . .. 

Indictment, Count I at ¶ 7(a); App. at 12a. 

 Section 371 penalizes individuals who "conspire . . . 

to defraud the United States, or any agency thereof . . .." 18 
32 

U.S.C. § 371. In Dennis v. United States, the Supreme Court 

elaborated on this statutory language, noting that § 371 covers 

not only fraud but any conspiracy for the purpose of "impairing, 

obstructing, or defeating the lawful function of any department 

of government . . .." 384 U.S. at 861 (citations omitted). The 

language of paragraph 7(a) of the indictment closely tracks the 

language of § 371 and Dennis. It is therefore clear that the 

government intended to charge Alston with a violation of § 371 

for obstructing lawful governmental functions. 

 A Klein conspiracy, which may be prosecuted under §371, 

is a conspiracy "to interfere with or obstruct one of [the 

government's] lawful governmental functions . . .." Klein, 247 

F.2d at 916. Obstruction of lawful government functions is 

exactly what was alleged in paragraph 7(a) of the Alston 

indictment. Alston was accused of impairing and obstructing the 

government's lawful function of "collecting data and reports of 

currency transactions in excess of $10,000 . . .." The 

indictment in Klein was "framed to make a general charge of 

impeding and obstructing the Treasury Department in the 

collection of income taxes . . .." Id. at 916. Likewise, the 

indictment in this case was framed to make a general charge of 

impeding and obstructing the Treasury Department in the 

collection of CTRs. See Derezinski, 945 F.2d at 1010; Farm & 

Home Savings Assoc., 932 F.2d at 1260; Cambara, 902 F.2d at 145-

47. 

 The district court understood the indictment to allege 

a Klein conspiracy, and Alston has not disputed that the 
33 

indictment charges a crime under 18 U.S.C. § 371 that is separate 

from the structuring and conspiracy to structure charges. 

Paragraph 7(a) clearly alleges a Klein conspiracy to thwart the 

government's lawful purpose in collecting information from CTRs.0

 The majority argues that United States v. Murphy

supports its argument concerning the insufficiency of the Alston 

indictment. Majority Op. at ___ [slip op. at 16]. The 

indictment in Murphy was narrowly drawn to state that defendants 

conspired to defraud the IRS in its collection of information 

with regard to currency transactions. 809 F.2d 1427, 1431-32 

(9th Cir. 1987). Specifically, the § 371 conspiracy to defraud 

charge rested "solely on the alleged falsehoods in the CTR 

[defendant] filed." Id. The court found, however, that 

defendant had in fact filed an accurate CTR. Id. at 1429-32. 

Therefore, the § 371 charge alleged in the indictment was 

manifestly unsupported by the evidence. 

 The government argued that although the CTR alone could 

not support a conviction on the § 371 charge, the court should 

 

0 The majority argues that "the entire indictment speaks only to 

structuring activities and contains no allegations that Alston 

defrauded the government in any other respect." Majority Op. at 

___ [slip op. at 16]. The majority's characterization of the 

activities in the indictment as "structuring activities" begs the 

question. Whether Alston engaged in "structuring" activities is 

a legal question, not a factual matter. We could assume a 

different result just as easily by insisting that the indictment 

alleges only "Klein-conspiracy activities" and that the language 

in indictment paragraph 7(a) "sounds in Klein-conspiracy." 

 The "Overt Acts" section of the indictment alleges a 

series of activities by Alston and Rosa. Indictment, Overt Acts 

at ¶¶ 1-14; App. at 13a-16a. The majority's repeated 

characterization of these activities as "structuring activities" 

ignores Count I paragraph 7(a), which proffers an alternative 

characterization of the facts. 
34 

nevertheless entertain a charge of conspiracy to defraud based 

upon broader allegations of money laundering. Id. at 1432. The 

government argued that the CTR was a thread in a larger web of 

transactions designed to thwart the IRS in the performance of its 

duties. The court refused to consider these broader allegations 

because "[t]he indictment d[id] not allege a conspiracy to 

defraud premised upon the defendants' entire laundering 

operations. It is far more narrowly drawn . . .. Therefore, the 

indictment before us does not properly allege a conspiracy to 

defraud." Id. (citing United States v. Dela Espriella, 781 F.2d 

1432, 1435 (9th Cir. 1986)). 

 This case is clearly distinguishable from Murphy. In 

Murphy, the government attempted to switch the factual basis and 

legal theory of its case from defendants' currency transactions 

to a broader charge encompassing the whole of defendants' money 

laundering operations, even though this broader charge was not 

alleged in the indictment. In this case, however, the government 

has not attempted to switch either its factual allegations or its 

legal theories. The indictment clearly alleged a § 371 

conspiracy to defraud in Count I, paragraph 7(a), based upon the 

"Overt Acts" alleged in the indictment. The government has 

alleged the same Klein conspiracy to defraud based upon the same 

facts throughout the proceedings. Where the government attempted 

in Murphy to switch factual scenarios and legal theories 

midstream, the government in this case merely seeks affirmation 

of the conspiracy to defraud that it alleged in the district 

court. Murphy is completely inapposite. 
35 

Mens Rea Necessary for Conviction

 The majority's second major contention is that Alston 

cannot be convicted of a § 371 conspiracy to defraud the United 

States unless he possesses the requisite mens rea for conviction 

of structuring or conspiracy to structure as set out in Ratzlaf. 

The majority states that "the charge against Alston for 

conspiracy to defraud, which was premised exclusively on Alston's 

structuring activity, must be vacated for failure to prove the 

mens rea (knowledge of illegality) required not only by the 

underlying substantive offense of structuring, but also by the 

conspiracy to defraud by structuring." Majority Op. at ___ [slip 

op. at 15]. 

 The majority refers to the crime of which Alston was 

convicted as "conspiracy to defraud by structuring" at least four 

times in its opinion. Majority Op. at ___ [slip op. at 3-4, 13, 

15, 20]. This formulation is indicative of what I believe to be 

a fundamental flaw in the majority's conception of this case. See

supra note 6. The crime for which Alston was actually convicted, 

of course, is a § 371 conspiracy to defraud the United States. 

The indictment alleges this conspiracy to defraud in a separate 

paragraph that does not include any reference to structuring. 

Indictment, Count I at ¶ 7(a); App. at 12a. Section 371 does not 

refer to "structuring" or conspiracy to defraud "by structuring." 

Congress included nothing in § 371 to indicate that the 

requirements for a § 5322 structuring conviction should be 

grafted onto a prosecution for a § 371 conspiracy to defraud the 

United States. Without aid of close statutory interpretation or 
36 

legislative history, the majority unilaterally amends § 371 to 

add the words "by structuring" and thereby allows all of the 

requirements for a § 5322 conviction to slip into a § 371 case 

where they do not belong.0

 The gravamen of the majority's argument seems to be 

that there is something improper about basing the case for a §371 

violation on the same so-called "structuring" behavior for which 

the government failed to obtain a conviction under § 5322. See, 

e.g., Majority Op. at ___ [slip op. at 15]. The majority 

observes that there is no difference between "the government's 

'defraud' scenario and the 'structuring' scenario of which Alston 

was acquitted." Majority Op. at ___ [slip op. at 18]. Neither 

the government, nor the district court, nor I have ever argued 

that there is a difference between the factual scenarios 

supporting each charge. There simply are two alternative 

charges, brought pursuant to two different statutes, based upon 

the same factual scenario. Because 18 U.S.C. § 371 has a lower 

mens rea requirement than 31 U.S.C. § 5322, Alston's behavior is 

culpable under § 371, even though he lacked the mens rea to be 

convicted under § 5322. 

 It has long been recognized "that when an act violates 

more than one criminal statute, the Government may prosecute 

under either so long as it does not discriminate against any 

class of defendants." United States v. Batchelder, 442 U.S. 114, 

 

0 As we have already noted, the "defraud" clause of § 371 is an 

independent offense requiring no reference to any other statute 

in the U.S. Code. Vazquez, 319 F.2d at 384. 
37 

123-24 (1979). It does not matter that the government decides to 

invoke a general statute when a more specific criminal statute is 

available. United States v. Curran, 20 F.3d 560, 565-66 (3d Cir. 

1994) (citing United States v. Woodward, 469 U.S. 105, 108 (1985) 

(per curiam); United States v. Beacon Brass Co., 344 U.S. 43, 46 

(1952); United States v. Parsons, 967 F.2d 452, 456 (10th Cir. 

1992); United States v. Hopkins, 916 F.2d 207, 218 (5th Cir. 

1990); United States v. Hansen, 772 F.2d 940 (D.C. Cir. 1985); 

United States v. Gordon, 548 F.2d 743, 745 (8th Cir. 1977); 

United States v. Carter, 526 F.2d 1276, 1278 (5th Cir. 1976)); 

United States v. Derezinski, 945 F.2d 1006, 1010 (8th Cir. 1991). 

 Thus, the government could have pursued a conviction in 

this case under the "defraud" clause of 18 U.S.C. § 371 alone, 

without ever bringing a charge for the more specific offenses of 

structuring or conspiracy to structure and without ever 

referencing 31 U.S.C. § 5322. In that case, there would be no 

question of characterizing the facts as "structuring" or of 

imposing the Ratzlaf mens rea on a § 371 case. We would simply 

examine the facts and compare them with the elements and mens rea

necessary for conviction of a § 371 violation to determine 

whether Alston is guilty of a Klein conspiracy to defraud the 

United States. See supra Part I. I submit that this is 

essentially the case we now have before us. If Alston's actions 

satisfied the requirements for a § 371 conspiracy to defraud the 

United States, it should not matter that he was acquitted of 

independent, narrower charges in a multiple-count indictment. 

Unless the majority can explain precisely which element of a §371 
38 

conspiracy to defraud the United States is lacking, we should 

affirm the district court. 

 The Seventh Circuit's opinion in United States v. 

Jackson is indistinguishable from this case. 33 F.3d 866 (7th 

Cir. 1994). In Jackson, defendants were originally convicted of 

structuring, conspiracy to structure, and conspiracy to defraud 

the United States--the exact same charges of which Alston was 

originally convicted. Id. at 867. Pursuant to Ratzlaf, the 

court reversed the structuring and conspiracy to structure 

convictions, but affirmed the § 371 conspiracy to defraud. Id.

at 868. 

 The majority argues that Jackson is distinguishable 

because it "involved additional charges in the indictment and 

additional evidence produced at trial, over and beyond that 

required for a conviction for pre-1994 structuring." Majority 

Op. at ___ [slip op. at 19]. Contrary to the majority's 

assertion, however, the Jackson court never said that additional 

charges or evidence were necessary for a conviction on the § 371 

count. The court's reasoning was quite clear: 

[Defendant's] first contention--that Ratzlaf requires 

reversal of the § 371 conviction--is misplaced because 

the government did not have to demonstrate that the 

defendants violated the antistructuring laws. Ratzlaf's 

holding concerning the meaning of "willfully violating" 

in the antistructuring laws, therefore, has no bearing 

on the defendants' § 371 convictions; § 371 contains no 

such language. 

Jackson, 33 F.3d at 871 (emphasis added). 

 The majority's attempts to distinguish Jackson miss the 

mark. First, the majority argues that it is significant that the 
39 

Jackson indictment, in charging the § 371 count, "never mentions 

a structuring violation or the relevant antistructuring 

statutes." Majority Op. at ___ [slip op. at 19] (quoting 

Jackson, 33 F.3d at 870). An examination of this sentence in 

context shows that it does not deserve the prominence that the 

majority gives it: 

[T]he government argues that a § 371 conspiracy to 

defraud the United States is an independent violation 

that need not be based on the violation of another 

substantive statute. The government points out that 

count one of the indictment in this case, which sets 

forth the § 371 charge, never mentions a structuring 

violation or the relevant antistructuring statutes. 

Count one charges a conspiracy "to defraud the United 

States"; it does not allege a conspiracy "to commit any 

offense against the United States." 

Jackson, 33 F.3d at 870. The Jackson court was merely 

emphasizing that the government alleged an independent conspiracy 

to defraud count and that that count is not dependent upon the 

other structuring counts--a point that I have emphasized and that 

supports a conviction on the independent § 371 count. The court 

meant nothing more by this statement, and it set out no general 

rule. 

 The majority's selected quotation from Jackson also 

fails to distinguish the language in the Jackson indictment from 

the language in the Alston indictment. Paragraph 7(a) of the 

Alston indictment, like Count I in Jackson, "never mentions a 

structuring violation or the relevant antistructuring statutes." 

Even though the § 371 conspiracy to defraud charge is based upon 

the same facts as the structuring charges, it is framed as an 
40 

independent allegation in paragraph 7(a). Thus any perceived 

"distinction" based upon this language is entirely illusory. 

 The majority's second "distinction" is equally futile. 

The majority argues that it is significant that Jackson involved 

other "extensive evidence" beyond structuring activity to 

demonstrate the conspiracy to defraud. As examples of such 

extensive evidence, the majority cites the fact that defendants 

had no wage or income and that they spent over $300,000 to 

purchase homes and exotic automobiles. Majority Op. at ___ [slip 

op. at 19]. 

 The Jackson court, however, never indicated that these 

additional facts were necessary for a conviction under § 371. The 

court "set[s] forth in detail the structuring activity of the 

defendants--as well as other evidence--that demonstrates a 

conspiracy to defraud the United States under § 371." Jackson, 

33 F.3d at 868. It does not mention or even allude to this 

"other evidence" when it explains its reasoning, however, and it 

never implies that such "other evidence" is essential for a 

conviction. Id. at 870-71. 

 The majority not only fails to explain why other 

evidence of a conspiracy to defraud the United States is 

necessary for a conviction; it ignores the existence of 

additional evidence in this case. There was evidence that 

Alston, like the defendants in Jackson, failed to file income tax 

returns. Compare Alston, Crim. No. 93-445-1 at 10; Appellant's 

App. at 40 with Jackson, 33 F.3d at 869. The majority offers no 

guidance as to how much "other evidence" is sufficient to support 
41 

a § 371 conviction. Surely a failure to file income taxes is an 

indication that defendants had a motive to defraud the United 

States of information about large cash purchases that would 

otherwise appear in CTRs. Again, the majority finds a 

"distinction" when there is no significant difference between the 

factual scenarios. 

 United States v. Derezinski, a case very similar to the 

case at bar,0 also supports the district court's reasoning. 

Derezinski was prosecuted under the "defraud" clause of § 371, 

even though he might have been prosecuted under the more specific 

"offense" clause. 945 F.2d at 1010. Since specific statutes 

existed, Derezinski argued, "it is no longer appropriate for the 

Government to prosecute conspiracies to commit acts governed by 

those statutes under the general defraud clause." Id. The 

Eighth Circuit firmly rejected this argument: 

[Defendant's] arguments attempt to draw our attention 

away from the true issue in this case. His claim that 

the Government is really charging him with conspiring 

to violate [specific substantive statutes] is simply 

not true. The Government has steadfastly persisted in 

proving that [the defendant] participated in a Klein

conspiracy to defraud the United States. While it may 

be true that the Government could have also charged 

[the defendant] under the specific offense clause of 

section 371, it is well settled that when conduct 

violates more than one criminal statute, the Government 

may choose which statute it will apply. [citing 

Batchelder]. The Government was within its discretion 

when it decided to prosecute [the defendant] under the 

general defraud clause of section 371. 

 

0 Like the defendant in this case, Derezinski was prosecuted 

under the defraud clause of § 371 for a Klein conspiracy that 

consisted, inter alia, of circumventing the financial reporting 

requirements of a financial institution. Derezinski, 945 F.2d at 

1009-10. 
42 

Id. It should make no difference to the § 371 prosecution in 

this case that the government failed to obtain convictions under 

the substantive statutes. 

 Most importantly, the Eighth Circuit denied 

Derezinski's challenge to the district court's jury charge 

regarding intent. Derezinski argued that because the criminal 

tax statute defining the specific offense required a showing of 

"willfulness" (as defined by Cheek v. United States), the 

government should bear the burden of demonstrating the same level 

of willfulness when pursuing a conviction under the "defraud" 

clause of § 371. Id. at 1012 (citing Cheek v. United States, 498 

U.S. 604 (1991)). The Eighth Circuit flatly rejected this 

contention: "Cheek does not apply to this case because the 

Government prosecuted Derezinski under a general conspiracy 

statute, not a criminal tax statute, and because 'willfulness' is 

not an express element of section 371." Likewise, Ratzlaf does 

not apply to this case. The government prosecution at issue is 

pursuant to § 371, not § 5322. "Willfulness" is not an express 

element of § 371. 

 The majority offers United States v. Curran as 

authority to support its argument concerning mens rea. Majority 

Op. at ___ [slip op. at 13-14] (citing United States v. Curran, 

20 F.3d 560 (3d Cir. 1994)). The majority's reading of Curran

would make § 371 dependent upon the level of mens rea necessary 

for a conviction under § 5322. Thus the majority's analysis of 

Curran conflicts directly with Vazquez's statement that the 

"defraud" clause of § 371 is an independent charge that need be 
43 

based on no other part of the U.S. Code. It also conflicts with 

the analysis of § 371 in Derezinski and Jackson. I do not 

believe that we intended in Curran to overrule Vazquez or to 

change radically our reading of the defraud clause of § 371. I 

also do not believe that the majority's interpretation of 

Curran's holding comports with a close reading of that case. 

 The defendant in Curran was prosecuted for causing 

campaign treasurers to make false statements to the Federal 

Election Commission (FEC). The defendant could not be prosecuted 

directly under 18 U.S.C. § 1001 for concealing material facts and 

making false representations, however, because it was the 

campaign treasurers, rather than the defendant, who prepared the 

false reports and submitted them to the Commission. Curran, 20 

F.3d at 567. The government therefore used 18 U.S.C. § 2(b) in 

conjunction with § 1001 to charge defendant with causing campaign 

treasurers to file false reports. Section 2(b), like 31 U.S.C. 

§5322, requires "willfulness" on the part of the defendant in 

order to sustain a conviction. Relying on Ratzlaf, we 

interpreted § 2(b) "willfulness" in cases brought under §§ 2(b) 

and 1001 in the federal election law context to mean that the 

prosecution must prove that "defendant knew of the treasurers' 

reporting obligations, that he attempted to frustrate those 

obligations, and that he knew his conduct was unlawful." Id. at 

569 (emphasis added). 

 The indictment in Curran alleged that defendant caused 

treasurers of various campaign committees to make incorrect 

reports to the FEC. Id. Nevertheless, the trial judge 
44 

erroneously charged the jury that "as a matter of law, . . . 

defendant had a legal duty to disclose the facts in question to 

the agency in question, the Federal Election Commission or to 

make certain that [the] information would have gotten to them." 

Id. (emphasis added). In regard to intent, the trial judge 

erroneously failed to instruct the jury that it must find that 

the defendant knew that his conduct was unlawful. Id. We 

therefore overturned the district court on two grounds: (1) its 

charge erroneously placed the reporting duty directly on the 

defendant and (2) the instruction on § 2(b) and § 1001 

willfulness did not communicate the proper mens rea. 

 The majority's discussion of Curran begins with the 

definition of "willfulness" as it appears in §§ 1001 and 2(b). 

Majority Op. at ___ [slip op. at 14]. Because there is no 

"willfulness" requirement in § 371, this part of the Curran

opinion is not directly applicable to this case. See discussion 

Part I, supra. The majority then addresses the section of the 

Curran opinion dealing with the "defraud" clause of § 371. The 

majority quotes Curran as holding that the district court's 

misstatement of the legal standard for "willfulness" "undermined 

not only the substantive counts, but the conspiracy [to defraud] 

one as well. The essence of conspiracy is an agreement to commit 

an act that is illegal." Majority Op. at ___ [slip op. at 14] 

(citing Curran, 20 F.3d at 571). 

 A careful reading of Curran demonstrates that the 

majority's interpretation of this dictum is plainly incorrect. 

The paragraph from which the majority quotes reads in full: 
45 

 As stated earlier, the misstatement of the law 

applicable to the defendant's legal duty to disclose 

facts to the Commission amounted to plain error. This 

misstatement undermined not only the substantive 

counts, but the conspiracy one as well. The essence of 

conspiracy is an agreement to commit an act that is 

illegal. If a jury is misled into considering as 

unlawful the omission of an act that the defendant is 

under no duty to perform, then a finding of conspiracy 

based on such conduct cannot stand. It follows that 

the conspiracy count must therefore be vacated. 

Curran, 20 F.3d at 571 (citations omitted). Reading these 

sentences in context, it is clear that we refer not to the 

district court's misstatement of the legal standard for 

"willfulness," as the majority contends, but to its misstatement 

of the defendant's duty to report to the FEC. This portion of 

Curran, like most of the opinion, discusses the duty of defendant 

relative to that of the campaign treasurers, not the mens rea

requirement for a § 371 conspiracy to defraud. 

 The majority's argument that Curran makes the defraud 

clause of § 371 dependent on the intent necessary for conviction 

of another offense, therefore, hinges entirely on one paragraph 

of dictum. That paragraph says in pertinent part that: 

The comments we have previously made about the failings 

of the instruction on intent apply to the conspiracy 

count as well. As noted in American Investors, 879 

F.2d at 1100, '[i]n order to prove a conspiracy, the 

government must show an agreement to commit an unlawful 

act combined with intent to commit the underlying 

offense.' On retrial, the instructions on intent as to 

the conspiracy count must track those applicable to the 

substantive counts. 

Id.

 Curran's restatement of the general rule for conspiracy 

does nothing to change the outcome in this case. If the 

majority insists on reading this dictum to make § 371 dependent 
46 

upon §5322, Curran conflicts with Vazquez's holding that a count 

drawn under the defraud clause "need refer to no other statute 

than §371." Vazquez, 319 F.2d at 384; see also Jackson, 33 F.3d 

at 870; Derezinski, 945 F.2d at 1010. In case of a conflict, I 

believe that our decision is controlled by Vazquez. 

 Moreover, the quote from American Investors, upon which 

the Curran dictum relies, was taken from a general discussion of 

conspiracy, without specific reference to the "defraud" clause of 

§ 371 or to Vazquez. Vazquez, on the other hand, explicitly 

stated a general rule for the "defraud" clause of § 371, 319 F.2d 

at 384; see Glasser v. United States, 315 U.S. 60, 67 (1942); a 

rule followed by this court and other courts in similar cases. 

See, e.g., Vogt, 910 F.2d 1184 (3d Cir. 1990); Jackson, 33 F.3d 

866 (7th Cir. 1994); Derezinski, 945 F.2d 1006 (8th Cir. 1991). 

Three sentences of dictum in a case almost entirely concerned 

with another legal issue should not serve to subvert our 

precedent as well as Congress' expression of the mens rea

necessary for conviction under 18 U.S.C. § 371. The Curran

language is simply too slender a reed to support the weight that 

the majority wishes it to bear. 

 For the above reasons, I conclude that Alston satisfies 

all of the elements necessary for conviction of a Klein

conspiracy to defraud the United States under 18 U.S.C. § 371. 

Nothing in Ratzlaf or in the structuring statutes themselves 

changes this fact, and the majority barely addresses it. I 

therefore respectfully dissent.