Source: https://law.justia.com/cases/federal/appellate-courts/F2/731/1540/30193/
Timestamp: 2020-05-29 02:04:14
Document Index: 298840375

Matched Legal Cases: ['§ 371', '§ 1059', '§ 1081', '§ 1051', '§ 5311', '§ 1081', '§ 5313', '§ 1052', '§ 5312', '§ 1058', '§ 5322', '§ 1051', '§ 5301', '§ 5312']

United States of America, Plaintiff-appellee, v. Victor Eisenstein, Beno Ghitis, Defendants-appellants, 731 F.2d 1540 (11th Cir. 1984) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Eleventh Circuit › 1984 › United States of America, Plaintiff-appellee, v. Victor Eisenstein, Beno Ghitis, Defendants-appellan...
United States of America, Plaintiff-appellee, v. Victor Eisenstein, Beno Ghitis, Defendants-appellants, 731 F.2d 1540 (11th Cir. 1984)
US Court of Appeals for the Eleventh Circuit - 731 F.2d 1540 (11th Cir. 1984) May 14, 1984
A jury convicted appellants of conspiracy to defraud the United States, in violation of 18 U.S.C. § 371 (1976), and felonious failure to file currency transaction reports (CTRs) with the Internal Revenue Service, as required by 31 U.S.C. §§ 1059, 1081, 1082 (1976),1 and regulations promulgated under those provisions. Ample evidence supported the convictions. Neither appellant asserted that the CTRs were actually filed. Nevertheless, we must reverse the convictions because appellants were prohibited from establishing their one plausible line of defense, good faith reliance on advice of counsel.
Ghitis and Eisenstein appeal their convictions on several grounds. In light of our decision to reverse, we reach only two of the issues raised by appellants' arguments: (1) whether appellants' currency exchange business was a "domestic financial institution" covered by 31 U.S.C. § 1081; and (2) whether the district court erroneously excluded evidence that appellants relied in good faith on the advice of counsel in refusing to file the CTRs. We conclude that the statute covers Ghitis' business but that the erroneous exclusion of highly relevant evidence requires reversal.
By enacting the Currency and Foreign Transactions Reporting Act, Congress authorized the Secretary of the Treasury to require certain types of financial institutions to report currency transactions. See 31 U.S.C. § 1051 (1976) (revised version at 31 U.S.C. § 5311 (1982)). Under the Act, "domestic financial institutions" must report any exchange of United States currency exceeding the amount prescribed by the Treasury Secretary. See 31 U.S.C. § 1081 (1976) (revised version at 31 U.S.C. § 5313 (1982)). The Secretary has promulgated regulations that require such institutions to report exchanges involving more than $10,000. See 31 C.F.R. Sec. 103.22(a).
31 U.S.C. § 1052(f) (1976) (revised version at 31 U.S.C. § 5312(b) (1982)).2
Only willful failures to file CTRs are subject to criminal penalties under the Act. See 31 U.S.C. § 1058 (1976) (revised version at 31 U.S.C. § 5322 (1982)). The law of this circuit is well established that, as it is used in the currency reporting statute, the term "willful require [s] proof of the defendant's knowledge of the reporting requirement and his specific intent to commit the crime." United States v. Granda, 565 F.2d 922, 926 (5th Cir. 1978). Congress no doubt made the failure to file CTRs a specific intent crime because, without knowledge of the reporting requirement, a would-be violator cannot be expected to recognize the illegality of his otherwise innocent act. See id. at 925-26; United States v. Warren, 612 F.2d 887, 890 (5th Cir.) (en banc), cert. denied, 446 U.S. 956, 100 S. Ct. 2928, 64 L. Ed. 2d 815 (1980).
A defendant charged with violating the reporting statute can attempt to negate proof of specific intent by establishing the defense of good faith reliance on advice of counsel. United States v. Bush, 599 F.2d 72, 76-78 (5th Cir. 1979). In order to take advantage of this defense, the defendant must show that he relied in good faith after first making a full disclosure of all facts that are relevant to the advice for which he consulted the attorney. See United States v. Taglione, 546 F.2d 194, 200-01 (5th Cir. 1977); Bursten v. United States, 395 F.2d 976, 981-82 (5th Cir. 1968). When the defendant presents evidence that he disclosed all relevant facts to his attorney and relied on the attorney's advice based on the disclosure, the trial court must instruct the jury on the defense of good faith reliance on counsel. Bursten v. United States, 395 F.2d at 982.
Whether a defendant acted in good faith for the purpose of seeking guidance as to the questions about which he is in doubt, and whether he made a full and complete report to his attorney concerning the necessity of filing a currency transaction report [,] IRS Form 4789, and whether he acted strictly in accordance with the advice received are questions for you to determine.
The Government now concedes that the trial court erred by sustaining the prosecutor's hearsay objections to defense counsel's questions about Ghitis' disclosure to his attorney. The lawyer's testimony was not offered as proof of the matter asserted--i.e., that Ghitis and Eisenstein operated a currency exchange--but as evidence that Ghitis fully disclosed the nature of his business to his attorney. The testimony was admissible to show the attorney's knowledge and to show Ghitis' compliance with the "full disclosure" requirement of his advice of counsel defense. See Fed.R.Evid. 803(3); cf. United States v. McLennan, 563 F.2d 943, 945-47 (9th Cir. 1977), cert. denied, 435 U.S. 969, 98 S. Ct. 1607, 56 L. Ed. 2d 60 (1978) ("When the defense is advice of counsel, the advice given, whether correct or not, and whether recitals in it are true or not, is always admissible.").
The applicable provisions of the Currency and Foreign Transactions Reporting Act were originally codified at 31 U.S.C. §§ 1051-83 (1976). After revision and recodification, those provisions now appear at 31 U.S.C. §§ 5301-22 (1982)
" [D]omestic financial agency" and "domestic financial institution" apply to an action in the United States of a financial agency or institution.
31 U.S.C. § 5312(b) (1) (1982).