10-3381-cr

United States v. Banki

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

August Term 2010

(Argued: February 15, 2011 Decided: October 24, 2011) 

(Amended: February 21, 2012)

Docket No. 10-3381-cr

 

UNITED STATES OF AMERICA,

Appellee,

v.

MAHMOUD REZA BANKI,

Defendant-Appellant.

 

Before:

CABRANES, POOLER, and CHIN, Circuit Judges.

Appeal from a judgment of the United States

District Court for the Southern District of New York (John

F. Keenan, J.) convicting defendant-appellant of violating

regulations relating to trade with Iran and making false

statements in response to Treasury Department subpoenas.

AFFIRMED in part, REVERSED in part, and VACATED

and REMANDED in part.

E. DANYA PERRY, Assistant United States

Attorney (Katherine Polk Failla,

Assistant United States Attorney, on

the brief), for Preet Bharara,

United States Attorney for the

Southern District of New York, New

York, New York, for Appellee.
- 2 -

KATHLEEN M. SULLIVAN (Christine H. Chung,

Marc L. Greenwald, William B. Adams,

on the brief), Quinn Emanuel

Urquhart & Sullivan, LLP, New York,

New York; Baruch Weiss, Arnold &

Porter LLP, Washington, D.C.; Tai H.

Park, Park & Jensen LLP, New York,

New York, for Defendant-Appellant.

Raymond A. Cardozo, Paige H. Forster,

Donna M. Doblick, Reed Smith LLP,

Pittsburgh, Pennsylvania, for Amici

Curiae Iranian American Bar

Association et al. 

CHIN, Circuit Judge:

Defendant-appellant Mahmoud Reza Banki ("Banki")

appeals from a judgment of the United States District Court

for the Southern District of New York convicting him,

following a jury trial, of (1) conspiracy to violate the

Iranian Transactions Regulations (the "ITR") and operate an

unlicensed money-transmitting business; (2) violating the

ITR; (3) operating an unlicensed money-transmitting

business; and (4) two counts of making false statements in

response to government subpoenas.

On appeal, Banki argues that the district court

erred in several respects when instructing the jury on the

conspiracy, ITR, and money-transmitting counts. He also

argues that he is entitled to a new trial on the false

statement counts because the government constructively

amended the indictment. He further accuses the government
- 3 -

of misconduct in its rebuttal summation, which he claims

necessitates a new trial on all counts. Finally, he argues

that he should be resentenced because the district court

miscalculated the applicable offense level.

We AFFIRM in part, REVERSE in part, and VACATE and

REMAND in part.

STATEMENT OF THE CASE

1. The Facts

Born in Tehran, Iran, Banki is a naturalized U.S.

citizen who has lived in the United States since he was 18.

After completing high school in Iran, Banki moved in 1994 to

the United States to attend college. While Banki has lived

in the United States, many of his family have continued to

reside in Iran, including his father, mother, uncle, and

cousin. 

In Iran, Banki's family owned three power

companies and a pharmaceutical company; his uncle was a

director of all four companies, and his cousin was the CEO

of one of the power companies. 

Beginning in May 2006, Banki's family began to

transfer large amounts of money -- totaling some $3.4

million -- from Iran to the United States. At trial, the

defense argued these transfers were necessary to protect the

family's assets. Banki's mother testified that the money
1 Amici contend that where it is used, the hawala is a

"widely-accepted cultural norm."

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was intended to be used to purchase an apartment in the

United States for herself, Banki, and his brother. 

The transfers were effectuated through an informal

system called a "hawala." The hawala system is widely used

in Middle Eastern and South Asian countries, and is

primarily used to make international funds transfers.1

Though there are many forms of hawala, in the paradigmatic

hawala system, funds are transferred from one country to

another through a network of hawala brokers (i.e.,

"hawaladars"), with one hawaladar located in the

transferor's country and one in the transferee's country. 

In this form, a hawala works as follows: If Person A in

Country A wants to send $1,000 to Person B in Country B,

Person A contacts Hawaladar A in Country A and pays him

$1,000. Hawaladar A then contacts Hawaladar B in Country B

and asks Hawaladar B to pay $1,000 in Country B currency,

minus any fees, to Person B. The effect of this transaction

is that Person A has remitted $1,000 (minus any fees) to

Person B, although no money has actually crossed the border

between Country A and Country B.

Eventually, Hawaladar B may need to send money to

Country A on behalf of a customer in Country B; he will then
- 5 -

contact Hawaladar A, with whom he now has a credit due to

the previous transaction. Hawaladar A will remit the money

in Country A to the designated person there, thus clearing

the debt between the two hawaladars. Typically, Hawaladar A

and Hawaladar B would engage in many parallel transactions

moving in both directions. A number of transactions might

be required before the books are balanced between the two

hawaladars. If after some period of time their ledgers

remain imbalanced, the hawaladars may "settle" via wire

transfer or another, more formal method of money

transmission. The hawala system operates in large part on

trust, since, as in the example above, a hawaladar will

remit money well before he receives full payment, and he

does so without the benefit of a more formal legal structure

to protect his investment.

To send money to Banki in the United States,

Banki's family retained the services of Ali Bakhtiari, a

Tehran-based hawaladar. In contrast to the paradigmatic,

two-hawaladar system discussed above, Bakhtiari used a

"matching" hawala system to facilitate the transfer of funds

from Iran to the United States. Under the "matching"

system, when Bakhtiari knew that Banki's family wanted to

send a sum of money to the United States, he would search

among his U.S.-based contacts for someone who wanted to send

approximately the same amount to Iran. If he was unable to
- 6 -

find a "match" among his U.S.-based contacts, which was

often the case, he would reach out to his network of Iranbased brokers to see if any of them knew of a match. These

brokers generally did not reveal the identity of their U.S.-

based contact, for fear of being cut out of the transaction

by Bakhtiari; instead, Bakhtiari would give the Iran-based

broker Banki's account information, which the broker would

relay to his U.S.-based contact. The U.S.-based contact

would then transfer into Banki's account a sum comparable to

the amount Banki's family wished to send. Once Bakhtiari

confirmed that the U.S.-based contact had transferred the

money into Banki's account, he would pay an equivalent

amount to the U.S.-based contact's intended recipient or to

the Iran-based broker who facilitated the match for the

broker to distribute to the intended recipient. Bakhtiari

and the broker would split the profits, which were derived

from the difference in the "buy" and "sell" exchange rates,

on any completed transaction. 

Between May 2006 and September 2009, Banki

received as many as 56 hawala-related deposits in his Bank

of America account from at least 44 different individuals

and companies. Most of the deposits were made via wire

transfer, but some were made via ATM deposit, counter

credit, or check. Wires for the transfers included

references to one contract for pistachios and to another for
- 7 -

"tomato paste and transportation." The denominations of the

individual deposits ranged from $2,600 to $199,971. There

were nine deposits of $10,000 or less; forty-one deposits of

between $10,000 and $100,000; and six deposits of more than

$100,000. In total, almost $3.4 million was deposited into

Banki's account. Banki retained this $3.4 million for his

personal use, including the purchase of a $2.4 million

apartment in New York City. 

The majority of the depositors were individuals,

but some were business entities, located all over the world,

including Hillmarcs Construction Corp. in the Philippines,

United Gulf Exchange Company in Kuwait, Torgovy Dom Atlanta

in Russia, and the Trenton Group, LLC, in Latvia. Banki did

not personally know any of the depositors. 

For most of these deposits, after the funds were

deposited into Banki's account, Banki e-mailed a family

member, almost always his father, to confirm that he had

received the funds. For example, on May 8, 2006, Banki

received a wire transfer of $199,971 from United Gulf

Exchange Co.'s account at a Kuwaiti bank; then, on May 10,

2006, Banki wrote an e-mail to his father stating, "Here is

a list of what I have received so far in the account. . . .

May 8, 2006: 199k from Kuwait . . . ."
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Though most of Banki's e-mails did not explicitly

acknowledge that there was a corresponding payout in Iran

for each deposit into Banki's account, one August 2006 email exchange clearly displayed Banki's knowledge that money

was moving to Iran, at least with respect to the August 2006

transaction. On August 9, 2006, Banki's uncle sent Banki an

e-mail that stated: "I told your father that a friend of

mine wants to send 6000 USDA to Iran. I asked him to send

the money to that account you gave me before." Shortly

thereafter, Ahmad Sheikholeslami transferred $6,000 into

Banki's account, and Banki e-mailed his uncle to confirm

receipt of the money. According to Sheikholeslami, a

defense witness, Banki's uncle was doing him a personal

favor by facilitating the transfer, and Bakhtiari was not

involved in the $6,000 transaction. Sheikholeslami's claim

that the $6,000 transaction was unrelated to Bakhtiari's

hawala was confirmed by Bakhtiari's ledgers, which did not

reflect the transaction. This transfer was undisputed by

Banki.

The transfers into Banki's account came to the

attention of the government, and in 2008, the U.S. Treasury

Department Office of Foreign Asset Control ("OFAC") served

Banki with two administrative subpoenas. Both subpoenas

requested information about transfers into Banki's account

and advised Banki that "knowingly falsifying or concealing a
- 9 -

material fact in [his] response . . . is a felony." The

January 2008 subpoena requested information about a $100,000

transfer into Banki's account in January 2007. By letter

dated January 16, 2008, Banki responded, identifying his

cousin as the source of the transfer. Then, in a June 2008

subpoena, OFAC requested "details of all payments [Banki

had] made, received, or facilitated in any manner involving

Iran since July 1, 2003." In his response, Banki again

identified his cousin as the source of the funds, and stated

that Banki had "made no payments to anyone in Iran since

[arriving] in the United States in 1994." 

2. Proceedings Below

In January 2010, Banki was indicted and arrested

in New York City. In March 2010, the government filed a

superseding indictment (the "Indictment"), charging Banki

with five counts as follows:

Count One: Conspiring to (a) violate the ITR, 31

C.F.R. pt. 560, and (b) operate an unlicensed

money-transmitting business, in violation of 18

U.S.C. § 1960;

Count Two: Violating, or aiding and abetting the

violation of, the ITR;

Count Three: Conducting, or aiding and abetting

the conduct of, an unlicensed money-transmitting

business;

Count Four: Making materially false

representations in response to a January 8, 2008

OFAC subpoena; and
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Count Five: Making materially false

representations in response to a June 24, 2008

OFAC subpoena. 

At the conclusion of a 15-day jury trial in May

2010, the jury convicted Banki on all counts. On Counts Two

and Three, the jury found Banki guilty as an aider and

abettor, not as a principal. 

Raising largely the issues he raises on appeal,

Banki moved for a new trial under Rule 33. In a written

decision, the district court (John F. Keenan, J.) denied the

motion. United States v. Banki, 733 F. Supp. 2d 404

(S.D.N.Y. 2010). In August 2010, the district court

sentenced Banki to 30 months' imprisonment, below the

Guidelines range of 63-78 months. 

This appeal followed.

DISCUSSION

I. Jury Instructions

This Court reviews a claim of instructional error

de novo and will set aside a conviction only where, "viewing

the charge as a whole, there was prejudicial error." United

States v. Hassan, 578 F.3d 108, 128 (2d Cir. 2008) (internal

quotation marks omitted); accord United States v. Amato, 540

F.3d 153, 164 (2d Cir. 2008). Jury instructions must be

viewed "in the context of the entire trial, not separately 

and in isolation." United States v. Reese, 33 F.3d 166, 172

(2d Cir. 1994). 
- 11 -

While a defendant is entitled to any legally

accurate jury instruction for which there is a foundation in

the evidence, he does not have a right to dictate the

precise language of the instruction. United States v. Han,

230 F.3d 560, 565 (2d Cir. 2000); United States v. Russo, 74

F.3d 1383, 1393 (2d Cir. 1996). "If the substance of a

defendant's request is given by the court in its own

language, the defendant has no cause to complain." Han, 230

F.3d at 565 (internal quotation marks omitted). 

A. ITR Instructions (Counts One and Two)

The International Emergency Economic Powers Act

("IEEPA") grants the President broad authority to issue

regulations that restrict or prohibit international trade

where he declares a "national emergency" with respect to an

"unusual and extraordinary" foreign policy or national

security threat. 50 U.S.C. §§ 1701-1702. 

Though the President has exercised his authority

under IEEPA to restrict trade with Iran since 1979, the

trade restrictions at issue here date to 1995. That year,

President Clinton issued Executive Order 12,957, which found

that "the actions and policies of the Government of Iran

constitute an unusual and extraordinary threat to the

national security, foreign policy, and economy of the United

States," and declared "a national emergency to deal with

that threat." Exec. Order No. 12,957, 60 Fed. Reg. 14,615,
2 Under the ITR, "'United States person' means any United

States citizen, permanent resident alien, entity organized under

the laws of the United States (including foreign branches), or

- 12 -

14,615 (Mar. 15, 1995). A subsequent 1995 executive order,

Executive Order 12,959, imposed comprehensive trade and

financial sanctions on Iran; it prohibited, inter alia, "the

exportation from the United States to Iran, the Government

of Iran, or to any entity owned or controlled by the

Government of Iran, or the financing of such exportation, of

any goods, technology, . . . or services." Exec. Order No.

12,959, 60 Fed. Reg. 24,757, 24,757 (May 6, 1995).

Pursuant to Executive Orders 12,957 and 12,959, the

Secretary of the Treasury promulgated the ITR, 31 C.F.R. pt.

560. Like Executive Order 12,959, the ITR generally

prohibit the exportation of goods, technology, or services

to Iran: 

§ 560.204 Prohibited exportation,

reexportation, sale or supply of goods,

technology, or services to Iran.

Except as otherwise authorized pursuant

to this part, . . . the exportation,

reexportation, sale, or supply, directly

or indirectly, from the United States, or

by a United States person, wherever

located, of any goods, technology, or

services to Iran or the Government of

Iran is prohibited . . . .

31 C.F.R. § 560.204. Thus, unless "otherwise authorized" in

part 560 of title 31 of the Code of Federal Regulations, a

United States person2

 or person located in the United States
any person in the United States." 31 C.F.R. § 560.314 (emphasis

added). 

- 13 -

may not export a service to Iran. Those who "willfully"

violate the ITR are subject to criminal penalties. 50

U.S.C. § 1705(a), (c). 

Banki raises two challenges to the district

court's ITR instructions. First, he argues that the

district court erred by failing to instruct the jury that

executing money transfers to Iran on behalf of others

qualified as "services" under the ITR only if undertaken for

a fee. Second, he argues that the district court erred by

failing to instruct the jury that non-commercial remittances

to Iran, including family remittances, are exempt from the

ITR's service-export ban. 

1. The Requirement of a Fee

In United States v. Homa International Trading

Corp., this Court held that "the execution on behalf of

others of money transfers from the United States to Iran is

a 'service'" under the ITR. 387 F.3d 144, 146 (2d Cir.

2004) (per curiam). In so holding, the Court observed, "The

term 'services' is unambiguous and refers to the performance

of something useful for a fee." Id. at 146 (emphasis added)

(citing United States v. All Funds on Deposit in United Bank

of Switzerland, No. 01 Civ. 2091(JSR), 2003 WL 56999, at *1

(S.D.N.Y. Jan. 7, 2003)). Banki relies on this language,
3 Banki requested the following instruction:

 

The export of money from the U.S., if done

without a fee, does not constitute a

"service" under . . . the regulations. The

relevant provisions of the regulation address

only services, and does [sic] not prohibit

the movement of funds.

 

A "service" is the performance of something

useful for a fee. Thus, even if you find

that Mr. Banki operated or facilitated the

operation of a "hawala," you must still find

that, in addition, that [sic] he did so for a

"fee." The movement of money constitutes a

"service" only if it is done for a fee. If

you find that Mr. Banki did not receive a

fee, or that he did not facilitate the

receipt of a fee, you must find Mr. Banki not

guilty.

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arguing that executing money transfers to Iran on behalf of

others does not violate the ITR unless performed for a fee

and that, accordingly, the district court erred by failing

to so instruct the jury.3

As a close reading of Homa reveals, however, the

language in Homa suggesting that the receipt of a fee is a

necessary element of a "service" is dicta. The defendant in

Homa, in challenging the sufficiency of the evidence, did

not argue that the receipt of a fee was required to be

convicted of exporting a service to Iran in violation of the

ITR. Rather, he argued: "It is simply unnatural to think of

a transfer of funds as an 'exportation of services.' If

anything is being exported, it is the funds themselves." 

Brief of Defendant-Appellant at 43-44, Homa, 387 F.3d 144. 
- 15 -

Thus, the Court was called upon to decide whether exporting

funds on behalf of another constituted the exportation of a

"service," not whether a "service" required receipt of a

fee. Accordingly, the statement in Homa that "[t]he term

'services' is unambiguous and refers to the performance of

something useful for a fee" is dicta, and we are not bound

by it.

Our conclusion that the language on which Banki

relies is dicta does not, however, end our inquiry. It

merely clears the path for our analysis of whether the

receipt of a fee is a necessary element of a service. 

"In interpreting an administrative regulation, as

in interpreting a statute, we must begin by examining the

language of the provision at issue." Resnik v. Swartz, 303

F.3d 147, 151-52 (2d Cir. 2002); see United States v.

Gagliardi, 506 F.3d 140, 145 (2d Cir. 2007). The ITR do not

define "services." See 31 C.F.R. § 560.204; see also id. §§

560.301-.321 ("General Definitions"). Thus, we must

"determine whether the language at issue has a plain and

unambiguous meaning with regard to the particular dispute in

[this] case." Gagliardi, 506 F.3d at 145. 

For its definition of service, the Homa Court

cited United States v. All Funds on Deposit in United Bank

of Swizerland, which in turn quoted Black's Law Dictionary. 

See Homa, 387 F.3d at 146; All Funds, 2003 WL 56999, at *1
- 16 -

(noting that Black's defines "'service' as 'the act of doing

something useful for a person or company for a fee'"

(quoting Black's Law Dictionary 1372 (7th ed. 1999))). 

Although Black's defines "service" as having a fee

component, other dictionaries do not. See, e.g., MerriamWebster's Collegiate Dictionary 1067 (10th ed. 2000)

(defining service as "useful labor that does not produce a

tangible commodity"); Webster's Third New International

Dictionary 2075 (Unabridged ed. 1993) (defining "service" as

"the performance of work commanded or paid for by another"

(emphasis added)). In fact, the very edition of Black's

cited in All Funds contains another definition of "service"

that does not have a fee component. Black's Law Dictionary

1372 (7th ed. 1999) (defining service as "[a]n intangible

commodity in the form of human effort, such as labor, skill,

or advice"). We therefore look to the broader text and

purpose of the ITR to aid our interpretation. See United

States v. Pesaturo, 476 F.3d 60, 68 (1st Cir. 2007)

(adopting an interpretation of a regulation because it was

"more persuasive both textually and in the context of the

government's stated purpose"). We have no difficulty

concluding that the transfer of funds on behalf of another

constitutes a "service" even if not performed for a fee.
- 17 -

The Iranian embargo is intended "to deal with the

unusual and extraordinary threat to the national security,

foreign policy, and economy of the United States" posed by

"the actions and policies of the Government of Iran." Exec.

Order No. 12,959, 60 Fed. Reg. 24,757, 24,757 (May 6, 1995);

Exec. Order No. 12,957, 60 Fed. Reg. 14,615, 14,615 (Mar.

15, 1995). The embargo is primarily concerned with a few

key actions and policies at the heart of the threat posed by

the Iranian government -- namely, the proliferation of

weapons of mass destruction, state-sponsored terrorist

activity, and efforts to frustrate Middle East diplomacy. 

See Homa, 387 F.3d at 146.

By design, however, the embargo is deliberately

overinclusive. Thus, for example, the ITR prohibit the

exportation of not only advice on developing Iranian

chemical weapons but also advice on developing Iranian

petroleum resources, see § 560.209; not only services to the

Iranian government but also services to Iranian businesses,

see § 560.204; and not only bombs but also beer, see §

560.204. In other words, to reform the actions of the

government of Iran, Executive Order 12,959 and the ITR adopt

a blunt instrument: broad economic sanctions intended to

isolate Iran. See Homa, 387 F.3d at 146 ("'[T]he obvious

purpose of [Executive Order 12,959] is to isolate Iran from

trade with the United States.'" (quoting United States v.

Ehsan, 163 F.3d 855, 859 (4th Cir. 1998))).
- 18 -

Given that isolation of Iran is the tool that the

embargo employs, there is no sound reason for the ITR to

distinguish between (1) the exportation of a service to Iran

for which the U.S. service provider received a fee and (2)

the exportation of a service to Iran for which the U.S.

service provider did not receive a fee, prohibiting only the

former. After all, both exportations have the same impact

in Iran.

Banki's argument that the term "services" has an

inherent fee requirement also proves too much, for it would

permit anomalies, such as permitting a U.S. entity to render

uncompensated legal or consulting services to an Iranian

corporation. We see no principled reason why the ITR would

permit the exportation of consulting services to an Iranian

corporation gratis but prohibit the exportation of the same

consulting services for a fee. 

Indeed, even without such broad economic sanctions

intended to isolate Iran, Banki's argument that a fee is

required fails because it would exempt from the ITR's

service-export ban certain particularly high-risk transfers. 

Specifically, a fee requirement would provide a dangerous

and unintended loophole for persons in the United States who

are motivated to export services to Iran without regard to

monetary compensation, including those seeking to foster the

very actions and policies that prompted the establishment of

the Iran embargo.
4 In the district court, Banki requested the following

instruction:

 

Not all services and transactions are

prohibited by the regulations. All noncommercial transfers of funds, also called

"remittances," are exempt. For example, noncommercial transfers of funds between family

members in Iran and family members located

elsewhere for personal use, called "family

remittances," are permitted under the

regulations. . . . Thus, any family

transfers Mr. Banki participated in, whether

to or from Iran, were permitted unless the

government proves that the transfers were

commercial in nature. If the transfers were

non-commercial, then they were permitted and

that is true even if there was a fee

involved.

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Thus, we conclude that the execution of money

transfers from the United States to Iran on behalf of

another, whether or not performed for a fee, constitutes the

exportation of a service. 

2. Non-Commercial Remittance Exception

Banki also argues that the district court erred by

failing to instruct the jury that non-commercial remittances

to Iran, including family remittances, are exempt from the

ITR's service-export ban.4 He seeks a judgment of acquittal 

or, alternatively, a new trial on Count Two and a new trial

on Count One.

As discussed above, the ITR generally prohibit the

exportation of "services" to Iran. See 31 C.F.R. § 560.204. 

In arguing that the ITR exempt non-commercial remittances

from the ITR's service-export ban, Banki relies on §

560.516, which reads as follows: 
5 The ITR define a "United States depository institution"

as "any entity (including its foreign branches) organized under

the laws of any jurisdiction within the United States, or any

agency, office or branch located in the United States of a

foreign entity, that is engaged primarily in the business of

banking (for example, banks, savings banks, savings associations,

credit unions, trust companies and United States bank holding

companies)." 31 C.F.R. § 560.319. It is undisputed that neither

Banki nor Bakhtiari's hawala is a United States depository

institution. 

- 20 -

§ 560.516 Payment and United States

dollar clearing transactions involving

Iran.

(a) United States depository institutions

are authorized to process transfers of

funds to or from Iran, or for the direct

or indirect benefit of persons in Iran or

the Government of Iran, if the transfer

is covered in full by any of the

following conditions and does not involve

debiting or crediting an Iranian account:

. . . .

(2) The transfer arises from an

underlying transaction that is not

prohibited by this part, such as a

non-commercial remittance to or from

Iran (e.g., a family remittance not

related to a family-owned

enterprise) . . . .

31 C.F.R. § 560.516 (emphasis added).5

The parties disagree as to the meaning of the

regulation. Banki argues that, by its plain language, §

560.516(a)(2) permits a "non-commercial remittance to or

from Iran," including "a family remittance." The government

argues, on the other hand, that § 560.516 permits noncommercial remittances between the United States and Iran

only if such remittances are processed through a U.S.

depository institution. 
- 21 -

We hold that, at a minimum, the regulation is

ambiguous in this respect. Consequently, we are required to

interpret the regulation in Banki's favor, for "[t]he rule

of lenity requires ambiguous criminal laws to be interpreted

in favor of the defendants subjected to them." United

States v. Santos, 553 U.S. 507, 514 (2008). The rule

"vindicates the fundamental principle that no citizen should

be held accountable for a violation of a statute whose 

commands are uncertain." Id. Here, the meaning of the

regulation is uncertain.

First, the plain wording of § 560.516 supports

Banki's view that family remittances are not prohibited --

at least not by 31 C.F.R. pt. 560. Indeed, the statute

explicitly lists a "family remittance" as an example of a

transaction that "is not prohibited" by Part 560. The

relevant language, which appears as an enumerated condition

under § 560.516(a), provides that U.S. depository

institutions are authorized to process a transfer of funds

to or from Iran when "[t]he transfer arises from an

underlying transaction that is not prohibited by this part,

such as a non-commercial remittance to or from Iran (e.g., a

family remittance not related to a family-owned

enterprise)." § 560.516(a)(2) (emphasis added). On its 
6 The regulation also expressly authorizes U.S.

registered securities brokers or dealers to process the permitted

transactions. 31 C.F.R. § 560.516(b).

- 22 -

face, then, the regulation would seem to be clear: a

"family remittance" is "not prohibited" by Part 560.

The conclusion that family remittances are not

prohibited under Part 560 does not necessarily lead to the

conclusion that they are permitted under the complete

regulatory scheme. See 31 C.F.R. § 560.101 (requiring that

transactions comply with all other applicable laws and

regulations). Nevertheless, the fact that § 560.516(a)(2)

specifically lists family remittances as an example of the

type of transactions U.S. depositary institutions are

authorized to process suggests that such actions do not

contravene other applicable laws or regulations. 

Second, the government's contention that only U.S.

depository institutions "are authorized" to process the

permitted transfers is inconsistent -- at least arguably --

with the language of the regulation.6 A fair reading of §

560.516 is that it tells U.S. depository institutions (and

securities brokers and dealers) that they are permitted to

process non-commercial remittances, including family

remittances, but the regulation does not provide that only

U.S. depository institutions (and securities brokers and

dealers) may do so. Indeed, nothing in section 560.516
- 23 -

specifically prohibits anyone from making a family

remittance. The government's assertion that the regulation

provides that family remittances "must be transacted through

U.S. banks," Gov't's Br. at 22 (emphasis added), is not

supported by the language of the regulation. If the intent

were to permit only U.S. banks (and U.S. brokers and

dealers) to process these remittances, the regulation could

have easily so provided. 

We acknowledge that textual arguments can be made

both ways. By authorizing U.S. banks and securities brokers

and dealers to process these transactions, without

authorizing anyone else, the regulation arguably limits the

authorization to the specified entities. Moreover, under

Banki's view, because non-commercial remittances are not

prohibited, arguably anyone could process a non-commercial

remittance for another. If that were the case, there would

be no apparent need to authorize a U.S. depository

institution to do so, and the first clause of § 560.516(a)

would be rendered a nullity, in violation of the wellsettled principle of statutory construction requiring courts

to "give effect to every clause and word of a statute, if

possible." R.E. Dietz Corp. v. United States, 939 F.2d 1, 5

(2d Cir. 1991); accord Corley v. United States, 129 S. Ct.

1558, 1566 (2009) ("A statute should be construed so that

effect is given to all of its provisions, so that no part
- 24 -

will be inoperative or superfluous, void or insignificant."

(internal quotation marks and brackets omitted)). 

We are not persuaded by the government that §

560.516 unambiguously grants U.S. depositary institutions

exclusive authority to process non-commercial remittances

between the United States and Iran. First, it is not at all

clear that Banki's interpretation of the regulation would

render the first clause a nullity. Given the complexity of

the regulatory scheme, the number of prohibitions and

exemptions contained in the ITR, the highly-regulated nature

of the banking industry, and the criminal nature of the

violations, it is appropriate that financial institutions

are given explicit guidance that they may process these

specific transactions. The processing of money transfers is

undoubtedly a "service," and the language in the regulation

makes clear that U.S. banks can process non-commercial

remittances without running afoul of the ban on providing

services. Without the language authorizing banks to provide

this service, banks would not be able to process noncommercial remittances, even if they are not prohibited. We

do not agree with the assertion that under Banki's

interpretation anyone could process a non-commercial

transaction; under the more general ban on providing goods,

technology, and services, providing a "service" of

processing non-commercial remittances would be barred. 
7 Nonetheless, the remitting of funds -- including one's

own funds -- to Iran is prohibited if the funds are being sent

for certain purposes. For example, a United States person is

prohibited from remitting his funds to Iran to invest "in Iran"

or "in property owned or controlled by the Government of Iran." 

31 C.F.R. § 560.207. Nor may a United States person remit his

funds to Iran to purchase Iranian petroleum resources, see 31

C.F.R. § 560.209(a)(1), or to finance the development of Iranian

- 25 -

Hence, the language in the first clause is necessary to

permit U.S. banks to provide this service.

Second, the same principle of statutory

construction can be applied to the government's

interpretation of the regulation: If the first clause means

that only U.S. banks (and U.S. securities brokers and

dealers) are authorized by the first clause to process noncommercial remittances, arguably the language providing that

such transactions are "not prohibited" likewise would be

superfluous. The two clauses can both have meaning: noncommercial remittances are not prohibited, and U.S. banks

are authorized to provide the service of processing them.

Moreover, no provision in the ITR prohibits a

United States person from remitting his own funds to an

individual in Iran for a non-commercial purpose. See 31

C.F.R. §§ 560.201-.209 ("Prohibitions"); see also 31 C.F.R.

§ 560.204 (prohibiting exportation of "goods, technology, or

services" to Iran, but not prohibiting exportation of

funds). While there are provisions prohibiting the

remitting of funds for certain purposes,7

 there is no
petroleum resources, see 31 C.F.R. § 560.209(b)(1). Similarly, a

United States person may not remit his funds to Iran to purchase

"[g]oods or services of Iranian origin or owned or controlled by

the Government of Iran." 31 C.F.R. § 560.206(a)(1).

- 26 -

general bar to the remissions of funds, see 31 C.F.R. pt.

560, and § 560.516(a)(2) expressly provides that noncommercial remissions are not prohibited. In contrast, the

sanctions enacted during the 1979 Iranian hostage crisis

specifically prohibited the "transfer of funds" to Iran, and

even then "family remittances" were excepted. Exec. Order

No. 12,211, 45 Fed. Reg. 26,685 (Apr. 17, 1980), revoked by

Exec. Order No. 12,282, 46 Fed. Reg. 7925 (Jan. 19, 1981);

Exec. Order No. 12,205, 45 Fed. Reg. 24,099 (Apr. 7, 1980),

revoked by Exec. Order No. 12,282. A fair question thus

exists as to whether a person could -- without violating the

ITR -- transmit funds herself to Iran, for example, by

personally carrying cash on a plane to Iran, assuming

compliance with any applicable customs laws. 

The government also argues that its interpretation

would further the purposes of the ITR. The ITR impose

recordkeeping and reporting requirements on U.S. depository

institutions when processing ITR-related transactions. See,

e.g., 31 C.F.R. § 560.516(c) (requiring U.S. depository

institutions to verify "that [an] underlying transaction is

not prohibited" by the ITR before initiating payment on

behalf of a customer); see also 31 C.F.R. § 501.601
8 Banki and amici contend that U.S. depository

institutions are unwilling to process family remittances to Iran,

and that individuals with family in Iran have no choice but to

resort to hawalas to provide their families with support. While

- 27 -

(requiring retention of transaction records for five years),

§ 501.602 (requiring reports to be submitted "under oath").

Construing the regulation to provide that only U.S. banks

(and securities brokers and dealers) are authorized to

process non-commercial remittances would further the ITR's

"evident purpose" of subjecting transactions to and from

Iran to "U.S. oversight and regulation." All Funds, 2003 WL

56999, at *2. The government fairly argues that it seems

unlikely that the ITR would impose such strict compliance

procedures on U.S. depository institutions processing noncommercial remittances, but impose no such requirements on

hawalas transmitting non-commercial remittances.

At the same time, the ITR were adopted to address

the actions of the Iranian government while limiting the

adverse impact of the sanctions on the Iranian people. See

31 C.F.R. § 560.210 (exempting from regulation certain

personal communications, humanitarian donations, information

and information materials, and travel); Exec. Order No.

12,957, 60 Fed. Reg. 14,615, 14,615 (Mar. 15, 1995) (finding

"that the actions and policies of the Government of Iran 

constitute an unusual and extraordinary threat" (emphasis

added)).8
we take note of this contention, we do not rely on it in deciding

this appeal.

- 28 -

In light of the ambiguity in the regulation,

Banki's conviction on Counts One and Two cannot stand.

B. Money Transmitting Instructions (Counts One and

Three)

Count Three charged Banki with conducting, or

aiding and abetting the conduct of, an unlicensed moneytransmitting business, in violation of 18 U.S.C. § 1960. 

Under § 1960, "[w]hoever knowingly conducts,

controls, manages, supervises, directs, or owns all or part

of an unlicensed money transmitting business" is subject to 

criminal penalties. 18 U.S.C. § 1960(a). As used in §

1960: 

the term 'unlicensed money transmitting

business' means a money transmitting

business which . . . --

(A) is operated without an

appropriate money transmitting

license in a State where such

operation is punishable as a

misdemeanor or a felony under State

law, . . . ;

(B) fails to comply with the money

transmitting business registration

requirements under [31 U.S.C. §

5330, which require moneytransmitting businesses to register

with the Secretary of the Treasury]

. . . ; or

(C) otherwise involves the

transportation or transmission of

funds that are known to the
- 29 -

defendant to have been derived from

a criminal offense or are intended

to be used to promote or support

unlawful activity . . . .

Id.; see 31 U.S.C. § 5330(a)(1) ("Any person who owns or

controls a money transmitting business shall register the

business (whether or not the business is licensed as a money

transmitting business in any State) with the Secretary of

the Treasury . . . ."). New York, where Banki lived during

the relevant time period, prohibits "engag[ing] in the

business of" transmitting money without a license, and

violators can be convicted of a misdemeanor or felony,

depending on the amount transmitted. N.Y. Banking Law §§

641, 650 (McKinney 2011). It is undisputed that Banki

neither possessed a New York money-transmitting license nor

registered with the Secretary of the Treasury. 

Section 1960 defines "money transmitting" broadly:

"'money transmitting' includes transferring funds on behalf

of the public by any and all means including but not limited

to transfers within this country or to locations abroad by

wire, check, draft, facsimile, or courier." Id. §

1960(b)(2). The parties do not dispute that transferring

funds through a hawala qualifies as "money transmitting"

under § 1960. 

Relying on this Court's definition of "money 

transmitting business" in United States v. Velastegui, Banki
9 Banki requested the following instruction:

 

A "business" is a commercial enterprise that

is regularly carried on for profit. Thus, a

single isolated transmitting of money is not

a business under this definition. It is for

you to determine when the quantity and nature

of the transmittals convert transactions into

a business.

 

. . . .

To be a "money transmitting business," the

business must transmit money to a recipient

in a place that the customer designates, for

a fee paid by the customer. 

- 30 -

argues that the district court, in instructing the jury,

erred by failing to define "money transmitting business" as

(1) an enterprise (not a single transaction) (2) that is

conducted for a fee or profit. See United States v.

Velastegui, 199 F.3d 590, 592, 595 n.4 (2d Cir. 1999)

(defining a "money transmitting business" as the

transmission of money "for a fee" involving more than "a

single, isolated transmission of money"). Banki requested

such an instruction below,9 but the district court declined

to give it, instructing the jury instead as follows: 

The term "money transmitting business"

includes any business which provides

check cashing, currency exchange or money

transmitting or remittance services or

issues or redeems money orders, travelers

checks and other similar instruments or

any other person who engages as a

business in the transmission of funds,

including any person who engages as a

business in an informal money transfer

system or any network of people who

engage as a business in facilitating the
10 The government does not dispute that Banki's requested

instruction is accurate; instead, it argues that "the definition

of 'business' [is] self-explanatory and necessarily presumed

multiple, fee-based transfers." 

- 31 -

transfer of money domestically or

internationally outside of the

conventional financial institutions

system. It is for you to determine

whether the quantity and nature of the

transmittals constitute a business. 

However, I instruct you that a hawala is

a money transmitting business. 

The district court, in denying Banki's Rule 33

motion, explained that it declined to define "business"

because the term is self-explanatory: "A business is not a

complex or legal concept. No juror needs a judge's charge

of law to comprehend that a 'business' is an ongoing

enterprise carried out for financial gain; there is no other

interpretation of the term 'business' the jury could have

possibly applied." Banki, 733 F. Supp. 2d at 417; cf.

Vargas v. Keane, 86 F.3d 1273, 1283 (2d Cir. 1996)

(Weinstein, J., concurring) ("The phrase 'reasonable doubt'

is self-explanatory and is its own best definition."

(internal quotation marks and citation omitted)). 

While we largely agree with the district court

that the term "business" is self-explanatory, we conclude

that the district court erred in its charge here.

First, Banki's requested charge was "legally

correct." Han, 230 F.3d at 565.10 In United States v.
- 32 -

Velastegui, we held that "an agent could [not] face federal

criminal prosecution [under § 1960] . . . for an isolated

instance of improper transmittal of money" because "section

1960(a) requires that the unlicensed entity be 'an illegal

money transmitting business.'" 199 F.3d at 595 n.4. Thus,

to find a defendant liable for operating an unlicensed money

transmitting business, a jury must find that he participated

in more than a "single, isolated transmission of money." 

See id. Likewise, giving the term "business" its "plain and

unambiguous" meaning, see United States v. Fuller, 627 F.3d

499, 504 (2d Cir. 2010), under § 1960 a "business" is an

enterprise that is carried on for profit or financial gain. 

See Merriam-Webster's Collegiate Dictionary 1067 (10th ed.

2000) (defining "business" as "a commercial or sometimes an

industrial enterprise"); Webster's II New Riverside

University Dictionary (1994) (defining "business" as a

"commercial enterprise or establishment"). See Velastegui,

199 F.3d at 592 ("A money transmitting business receives

money from a customer and then, for a fee paid by the

customer, transmits that money to a recipient . . . ."

(emphasis added)). 

Second, there was a "foundation in the [trial]

evidence," United States v. Russo, 74 F.3d 1383, 1393 (2d

Cir. 1996), for Banki's request for an instruction that a

"business" must involve more than a single, isolated
- 33 -

transaction. The evidence at trial was such that a rational

jury could have concluded that the government proved beyond

a reasonable doubt that Banki knew funds were moving to Iran

in only one transaction: the $6,000 Sheikholeslami

transaction. Although the e-mails associated with the

$6,000 transaction clearly showed that Banki knew that funds

were moving to Iran as part of the transaction, e-mails

relating to other hawala transactions were far less

explicit. In addition, Bakhtiari's testimony and ledgers

supported the inference that Bakhtiari was not involved in

the $6,000 transaction; thus, the jury could have concluded,

as the defense argued, that the $6,000 transaction was a

one-time favor for a family friend. The jury could have

concluded that the government failed to prove that Banki

knew funds were moving to Iran in more than one transaction,

and, accordingly, Banki was entitled to the substance of his

requested instruction -- that he could not be convicted

under § 1960 for a single, isolated transmission of money. 

Third, the district court compounded the problem

by stating, in its charge to the jury: "I instruct you that

a hawala is a money transmitting business." By doing so,

the district court arguably relieved the government of its

burden of proving that Banki's knowledge that money was

moving to Iran extended beyond the $6,000 transaction. See

18 U.S.C. § 1960 (prohibiting "knowingly" conducting an
- 34 -

unlicensed money transmitting business); Velastegui, 199

F.3d at 592, 595 n.4 (holding that a "money transmitting

business" must involve more than "a single, isolated

transmission of money"). In its background instructions,

the district court had charged the jury, "In this case you

have heard allegations that the defendant operated a hawala,

an unlicensed value transfer system, through which money was

sent to Iran." (Tr. at 1629:13-15 (emphasis added)). By

later instructing the jury that "a hawala is a money

transmitting business," the district court arguably was

instructing the jury that if it found that Banki operated a

"hawala," then he necessarily operated a money transmitting

business, thereby taking the latter issue away from the

jury. Simply put, looking at the charge in the context of

the entire trial, we are uncertain of the theory on which

the jury chose to convict. 

Accordingly, we vacate Banki's convictions on

Count One (to the extent it alleged that Banki operated an

unlicensed money-transmitting business in violation of 18

U.S.C. § 1660) and Count Three and remand for a new trial. 

C. Customer or Beneficiary Instruction (Counts One,

Two, and Three)

Banki next argues that the district court erred by

refusing to instruct the jury that a "mere customer or

beneficiary" of a hawala transaction cannot be held 
11 Banki's proposed instruction on the ITR and moneytransmitting counts stated the following: 

[I]f Mr. Banki acted as a mere customer or

beneficiary of the hawala or unlicensed

transmittal service, then the government has

not met its burden and you may not find Mr.

Banki liable as an aider and abettor. That

is true even if, while utilizing or

benefitting from the services of the hawala

or unlicensed transmittal service, he had a

full understanding of the hawala or

transmittal services. . . . A customer who

calls Iran with the purpose of effectuating

transfers for others may be acting beyond his

capacity as a mere customer. On the other

hand, if a customer is calling simply to

acknowledge his or her own receipt of funds

and is acting normally incident to being a

customer or beneficiary, then such an act,

without more, cannot form the basis of

liability. 

Banki proposed a similar instruction for the conspiracy count.

- 35 -

criminally liable, either as an aider and abettor on Counts

Two and Three, or as a conspirator on Count One.11

With respect to the money-transmitting count,

Banki argues that the district court erred by refusing to

instruct the jury that a "mere customer or beneficiary" of

an unlicensed money-transmitting business is exempt from

criminal liability. In so arguing, Banki draws an analogy

between his case and this Court's case law excepting certain

minor participants in (1) illegal gambling businesses and

(2) drug transactions from criminal liability. Banki's

reliance on these cases is misplaced. 

First, as to the gambling analogy, Count Three

charges Banki with violating 18 U.S.C. § 1960, which imposes
- 36 -

criminal penalties on a person who "knowingly conducts,

controls, manages, supervises, directs, or owns all or part

of an unlicensed money transmitting business." 18 U.S.C. §

1960(a). Similarly, 18 U.S.C. § 1955 -- which was the model

for § 1960, see S. Rep. No. 101-460, at 15 (1990) -- imposes

criminal sanctions on any person who "conducts, finances,

manages, supervises, directs, or owns all or part of an

illegal gambling business." 18 U.S.C. § 1955(a). 

We have interpreted 18 U.S.C. § 1955 to prohibit a

broad range of conduct: the statute reaches "not only the

upper, but also the lower, echelon of a gambling business,"

including agents, runners, independent contractors, and

salesmen. United States v. Grezo, 566 F.2d 854, 857 (2d

Cir. 1977); United States v. Becker, 461 F.2d 230, 232 (2d

Cir. 1972), vacated on other grounds, 417 U.S. 903 (1974). 

Mere betting customers, however, do not "conduct" the

gambling business within the meaning of § 1955. Grezo, 566

F.2d at 857. 

But not all bettors are isolated from criminal

liability under § 1955. In Grezo, the defendant, who was an

independent bookmaker who placed "layoff bets" with a larger

gambling business that was the target of the indictment, was

accused of "conducting" the target gambling business. Id.

at 857-58. Rejecting the defendant's argument that he was a

"mere bettor or customer," we held that "when otherwise
- 37 -

independent bookmakers [whose gambling businesses do not

meet the definition of 'business' under § 1955] regularly

place consistent, substantial layoff bets with a gambling

business [as defined by § 1955], they should be considered

to 'conduct' that business within the meaning of § 1955,

despite any superficial similarity which their activities

may bear to those of the average customer." Id. at 859. In

so holding, we reasoned that because a layoff bettor's bets

help a bookmaker balance his own book of bets and maintain a

uniform "line" among bookmakers, the bookmaker and defendant

layoff bettor shared a "community of interest," which

separated the layoff bettor from a "mere" bettor. Id. at

859.

Second, Banki draws an analogy to Abuelhawa v.

United States, 129 S. Ct. 2102 (2009). In Abuelhawa, the

defendant placed six phone calls to arrange two one-gram

cocaine purchases -- transactions that amount to

misdemeanors under the Controlled Substances Act, 21 U.S.C.

§ 844. 129 S. Ct. at 2104. Instead of charging Abuelhawa

with misdemeanors, however, the government charged Abuelhawa

with, and obtained convictions on, six felony counts of

using a communication facility to "facilitate" drug

distribution, 21 U.S.C. § 843(b). 129 S. Ct. at 2104. The

Supreme Court reversed Abuelhawa's convictions, reasoning

that "where a statute treats one side of a bilateral
- 38 -

transaction more leniently, adding to the penalty of the

party on that side for facilitating the action by the other

would upend the calibration of punishment set by the

legislature." Id. at 2106. 

Even assuming, however, that a "mere customer or

beneficiary" exemption, as requested by Banki, applies in

the context of § 1960, we would conclude that Banki was not

entitled to such an instruction. 

"A defendant is entitled to a jury instruction on

a defense theory for which there is any foundation in the

evidence." United States v. Russo, 74 F.3d 1383, 1393 (2d

Cir. 1996) (emphasis added) (internal quotation marks

omitted). Here, there was no foundation in the evidence for

a mere customer or beneficiary instruction. 

Banki was convicted of facilitating the transfer

of money to Iran, not with receiving money from Iran. The

Indictment alleged in Count Three that Banki "effectuated,

and aided and abetted, the transfer of [funds] . . . to

residents within Iran." (Indictment ¶ 22 (emphasis added)). 

In addition, the district court repeatedly instructed the

jury that it was Banki's role in the transfer of funds to

Iran, not his receipt of funds from Iran, that potentially

subjected him to criminal liability. (See Tr. 1629:13-23

("In this case you have heard allegations that the defendant

operated a hawala, an unlicensed value transfer system,
- 39 -

through which money was sent to Iran. . . . I remind you

that the defendant is charged with sending money to Iran,

not with receiving money from Iran."); see Tr. 17:9-11

("[Banki] is not charged with transmitting money or services

to the Iranian government; he is charged with sending money

to people in Iran.")). Thus, the jury could only convict

Banki for money-transmitting for his role in transferring

funds to Iran.

With respect to the transfer of funds to Iran,

Banki's role was that of an intermediary -- not a customer

or beneficiary. By finding Banki guilty on the moneytransmitting count, the jury necessarily found that Banki

knew that he was facilitating the transfer of funds to Iran. 

See 18 U.S.C. § 1960(a). The defense argues that if Banki

had the requisite knowledge with respect to any transaction,

it was only the $6,000 transaction. But even with respect

to that transaction, Banki was an intermediary -- not a

customer or beneficiary. Simply put, where the crime

charged is transmitting money to Iran without a license, the

"customer" is the wire originator and/or the intended

recipient.

Nor was Banki entitled to a mere customer or

beneficiary instruction on the ITR count. The ITR count

charged Banki with violating the ITR by providing "money

transfer services, through the operation of a 'hawala'
- 40 -

informal value transfer system, to persons in Iran." 

(Indictment ¶ 20 (emphasis added)). In other words, Banki

was accused of being the supplier of the unlawful service --

not a customer or beneficiary. Thus, to give a "mere

customer or beneficiary" instruction on the ITR count at

Banki's trial would be the equivalent of giving such an

instruction at the trial of Abuelhawa's drug dealer. 

Accordingly, there was no foundation in the evidence for

Banki's requested instruction. See Russo, 74 F.3d at 1393.

Finally, Banki was not entitled to a "mere

customer or beneficiary" instruction on the conspiracy

count. In support of such an instruction, Banki relies on

the "buyer-seller exception" in this Court's conspiracy case

law. "To prove a conspiracy, the evidence must show that

'two or more persons agreed to participate in a joint

venture intended to commit an unlawful act.'" United States

v. Parker, 554 F.3d 230, 234 (2d Cir. 2009) (quoting United

States v. Desimone, 119 F.3d 217, 223 (2d Cir. 1997)). 

Although, "[a]s a literal matter, when a buyer purchases

illegal drugs from a seller, two persons have agreed to a

concerted effort to achieve the unlawful transfer of the

drugs from the seller to the buyer," we have "carved out a

narrow exception to the general conspiracy rule for such

transactions." Id. at 234. This exception is intended to

"preserve[] important priorities and distinctions of the
- 41 -

federal narcotics laws, which would otherwise be

obliterated." Id. It is the buyer -- the less culpable

party -- who may take advantage of the buyer-seller

exception. Id. 

Given that Banki was accused of conspiring to

export a service to Iran and operate an unlicensed moneytransmitting business that remitted funds to Iran, there is

no basis in the evidence to conclude that Banki was the

equivalent of the "buyer," even if the buyer-seller

exception were extended to the present facts. Thus, the

district court properly declined to give Banki's requested

"mere customer or beneficiary" instruction on the Conspiracy

Count.

In sum, the district court properly denied Banki's

request for an instruction that, if the jury found that

Banki acted as a "mere customer or beneficiary" of a hawala

transaction or unlicensed transmittal service, it could not

hold Banki liable either as an aider and abettor under

Counts Two and Three or as a conspirator under Count One.

II. Constructive Amendment or Variance

Counts Four and Five of the Indictment charged

Banki with making materially false statements in response to

OFAC administrative subpoenas, in violation of 18 U.S.C. §

1001. "To convict a defendant of violating Section 1001,

the government must prove that the defendant: (i) knowingly
- 42 -

and willfully, (ii) made a statement, (iii) in relation to a

matter within the jurisdiction of a department or agency of

the United States, (iv) with knowledge that it was false or

fictitious and fraudulent." United States v. Wiener, 96

F.3d 35, 37 (2d Cir. 1996).

Banki argues that the government constructively

amended the false statement counts by shifting its theory of

materiality during its case and closing arguments. The

government stated in its opening that Banki falsely

identified his non-citizen cousin, instead of his U.S.-

citizen father, as the source of wire transfers into his

account because "OFAC can only regulate the conduct of U.S.

citizens and residents." In other words, the government

presaged in its opening that its case would rest upon a

citizenship theory of materiality. During the defense

opening, counsel stated that Bakhtiari "never got money from

the father"; instead, counsel asserted that the money came

from Banki's "uncle." 

At trial, the government introduced substantial

evidence that Banki's father was the source of the funds

transferred into Banki's account, including e-mails from the

father to Banki checking on the status of transfers and e-
- 43 -

mails from Banki to his father confirming receipt of

transfers. 

Although the government had laid out a

citizenship-based theory of materiality in its opening

statement, in advance of the fourth day of trial the

government informed the defense that it intended to elicit

testimony regarding an alternate theory of materiality. 

Specifically, the government sought to show, through the

testimony of OFAC enforcement investigations officer

Stephanie Rice, that Banki's uncle -- who was the actual

source of the transfers, according to the defense opening --

had been the subject of an OFAC investigation in the late

1990s. The government thus was suggesting that Banki had

falsely identified the cousin as the source of the funds

rather than the uncle because the uncle had been under

investigation. Defense counsel objected, arguing that "the

government [was] changing its theory of the case." The

district court overruled the objection.

A. Constructive Amendment

The Fifth Amendment provides that "[n]o person

shall be held to answer for a capital, or otherwise infamous

crime, unless on a presentment or indictment of a Grand

Jury." U.S. Const. amend. V. Once a grand jury indicts a

defendant, the "charges may not be broadened through

amendment except by the grand jury itself." Stirone v.

United States, 361 U.S. 212, 216 (1960).
- 44 -

We review a constructive amendment challenge de

novo, United States v. Wallace, 59 F.3d 333, 336 (2d Cir.

1995), and a constructive amendment is a per se violation of

the Grand Jury Clause, United States v. Thomas, 274 F.3d

655, 670 (2d Cir. 2001).

An indictment is constructively amended if either

the "proof at trial or the trial court's jury instructions

so altered an essential element of the charge that, upon

review, it is uncertain whether the defendant was convicted

of conduct that was the subject of the grand jury's

indictment." United States v. Milstein, 401 F.3d 53, 65 (2d

Cir. 2005). This occurs "when the trial evidence or the

jury charge operates to broaden the possible bases for

conviction from that which appeared in the indictment." 

United States v. Rigas, 490 F.3d 208, 225 (2d Cir. 2007)

(brackets and internal quotation marks omitted). But

"'[w]here a generally framed indictment encompasses the

specific legal theory or evidence used at trial,' there is

no constructive amendment." Id. at 228 (quoting Milstein,

401 F.3d at 65). 

We have acknowledged that in applying these 

general principles, our cases have reached "'divergent

results.'" Rigas, 490 F.3d at 228 (quoting Milstein, 401

F.3d at 65). Nonetheless, one "constant" in our case law is

"that we have 'consistently permitted significant

flexibility in proof, provided that the defendant was given
- 45 -

notice of the core of criminality to be proven at trial.'" 

Id. (quoting United States v. Patino, 962 F.2d 263, 266 (2d

Cir. 1992)).

We conclude that the "core of criminality" alleged

in Counts Four and Five of the Indictment was that Banki

falsely identified his cousin -- a non-citizen relative as

opposed to his citizen father -- as the source of wire

transfers into his account in his January and July 2008

responses to OFAC subpoenas. Cf. United States v.

Salmonese, 352 F.3d 608, 621 (2d Cir. 2003) (describing the

"core criminality" pleaded in the indictment as "a fraud

scheme, operating between October 1995 and June 1996, whose

ultimate purpose was the conspirators' realization of

millions of dollars in illegal profits from their sales of

inflated stripped warrants"); United States v. Danielson,

199 F.3d 666, 669-70 (2d Cir. 1999) (holding that

indictment, which alleged that defendant possessed "7 rounds

of .45 calibre ammunition" was not constructively amended

when jury charge permitted jury to convict on basis of

possession of shells, rather than full rounds). Even

assuming there was a charge in theory at trial to the extent

that the government suggested an additional motive for the

false statement -- avoiding identifying the uncle who had

been under investigation, the proof at trial and brief

reference in the government's rebuttal summation related to
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the same statements in the same letters as described in the

Indictment. Thus, there is no "uncertain[ty]" regarding

"whether [Banki] was convicted of conduct that was the

subject of the grand jury's indictment." Milstein, 401 F.3d

at 65 (emphasis added). 

Accordingly, because the Indictment gave Banki

notice of the core of criminality to be proved at trial, the

Indictment was not constructively amended. 

B. Variance

A variance occurs "when the charging terms of the

indictment are left unaltered, but the evidence offered at

trial proves facts materially different from those alleged

in the indictment." Thomas, 274 F.3d at 670 (internal

quotation marks omitted). Unlike a constructive amendment

claim, "a defendant must demonstrate prejudice to prevail on

a variance claim." Id.

Here, Banki cannot demonstrate that he was

prejudiced by the introduction of evidence regarding the

prior investigation of his uncle. In its proposed jury

instructions, the government requested an instruction that

"a false statement is material if it is capable of

distracting Government investigators' attention away from a

potential subject of an investigation." Thus, Banki was on

notice before trial of this potential theory of materiality. 
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Accordingly, the introduction of testimony that

Banki's uncle's name "came up" in a prior OFAC investigation

and the related statements in the government's rebuttal

summation do not constitute an impermissible variance. 

III. Government Misconduct in Rebuttal Summation

Banki alleges two instances of government 

misconduct. First, Banki seeks a new trial on Counts Four

and Five, arguing that the government committed misconduct

by using its rebuttal summation to argue for the first time

that Banki's lies to OFAC were material because his uncle

had previously been the potential subject of an OFAC

investigation. Second, Banki seeks a new trial on Counts

One, Two, and Three, arguing that the government committed

misconduct by arguing in rebuttal summation that Banki could

be convicted solely on the basis of the $6,000 transaction. 

The district court rejected both claims of misconduct in

denying Banki's Rule 33 motion. See Banki, 733 F. Supp. 2d

at 411-14.

We review for abuse of discretion a district

court's denial of a Rule 33 motion alleging prosecutorial

misconduct. See United States v. Burns, 104 F.3d 529, 536-

37 (2d Cir. 1997). A defendant asserting that a

prosecutor's remarks warrant a new trial "face[s] a heavy

burden, because the misconduct alleged must be so severe and

significant as to result in the denial of [his] right to a
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fair trial." United States v. Locascio, 6 F.3d 924, 945 (2d

Cir. 1993). When evaluating a claim of improper argument,

this Court "must consider the objectionable remarks within

the context of the entire trial." United States v. Espinal,

981 F.2d 664, 666 (2d Cir. 1992). Even if a remark is

deemed improper, it must cause "substantial prejudice" to

result in a new trial. United States v. Shareef, 190 F.3d

71, 78 (2d Cir. 1999) (internal quotation marks and citation

omitted). In determining whether a defendant has suffered

"substantial prejudice," this Court considers "[1] the

seriousness of the misconduct, [2] the measures adopted by

the trial court to cure the misconduct, and [3] the

certainty of conviction absent the improper statements." 

United States v. Parker, 903 F.2d 91, 98 (2d Cir. 1990).

We have reviewed the government's rebuttal

summation in light of these principles, and conclude that

there was no misconduct here. The district court did not

abuse its discretion in denying the Rule 33 motion to the

extent it was based on alleged prosecutorial misconduct. 

IV. The Sentencing Enhancement

In light of our decision above, we need not reach

Banki's argument that the district court miscalculated the

applicable Guidelines Range. 
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CONCLUSION

For the foregoing reasons, 

1. As to Count One, we VACATE and REMAND;

2. As to Count Two, we REVERSE;

3. As to Count Three, we VACATE and REMAND; and 

4. As to Counts Four and Five, we AFFIRM.

The mandate shall issue forthwith.