Opinion ID: 701257
Heading Depth: 2
Heading Rank: 4

Heading: Illegal Structuring

Text: 35 Federal law requires financial institutions to file Currency Transaction Reports with the Secretary of the Treasury for cash transactions in excess of $10,000. 31 U.S.C. Sec. 5313 (1988); 31 C.F.R. Sec. 103.22(a) (1994). A related provision, under which Wynn was convicted on two counts, forbids structuring a transaction to evade this requirement. It provides that 36 [n]o person shall for the purpose of evading the reporting requirements of section 5313(a) ... 37 (3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions. 38 31 U.S.C. Sec. 5324(a)(3) (Supp. IV 1992). A third related provision establishes that criminal penalties are available for persons who willfully violate this statutory scheme. 31 U.S.C. Sec. 5322(a) (Supp. IV 1992). 39 Last year, in Ratzlaf v. United States, --- U.S. ----, 114 S.Ct. 655, 126 L.Ed.2d 615 (1994), the Supreme Court interpreted the term willfully to require the Government to prove that a defendant acted with knowledge that his conduct was unlawful in order to secure a conviction under section 5324. Id. at ----, 114 S.Ct. at 657. Like Wynn, Ratzlaf purchased a series of cashier's checks from different banks, which he used to pay off a single debt of more than $10,000. Id. On appeal of his conviction, Ratzlaf maintained, and the Supreme Court agreed, that he could not be convicted solely on the basis of his knowledge that a financial institution must report currency transactions in excess of $10,000 and his intention to avoid such reporting. Id. at ---- - ----, 114 S.Ct. at 657-58. Because Ratzlaf was issued while Wynn's convictions were pending appeal, it is controlling. Griffith v. Kentucky, 479 U.S. 314, 328, 107 S.Ct. 708, 716, 93 L.Ed.2d 649 (1987) (new judicial rulings for criminal prosecutions apply retroactively to all cases not yet final). Wynn contends that the evidence against him is insufficient to support his convictions because it does not establish that he knew structuring was unlawful. We agree; consequently, we reverse his two section 5324 convictions. 40 To be sure, there was abundant evidence that Wynn was aware that financial institutions are required to report large cash deposits. Wynn's purchase of four separate cashier's checks to purchase the Range Rover in 1987 and three separate checks to pay off the bank loan in 1988, each for less than $10,000, created an inference that he was motivated to avoid the reporting requirement. The Government maintains that these inferences, coupled with Wynn's knowledge that he was laundering money when making the Range Rover purchase, permitted the jury to infer a willful violation of section 5324. It relies heavily on a footnote in Ratzlaf that states, unremarkably, that the requisite knowledge may be inferred from conduct. --- U.S. at ---- n. 19, 114 S.Ct. at 663 n. 19. 41 We recognize that, since the issuance of Ratzlaf, the Government's position has found support in decisions by the First Circuit, which recently held on similar facts that the purchase of money orders at three separate banks tends to prove knowledge of illegality, United States v. Marder, 48 F.3d 564, 574 (1st Cir.1995), and the Seventh Circuit, which found that a defendant's scheme to enlist family members to purchase numerous money orders and cashier's checks in small denominations provided sufficient evidence of knowledge of illegality. United States v. Walker, 25 F.3d 540, 543, 548 n. 8 (7th Cir.1994). Given the Supreme Court's discussion in Ratzlaf, however, we must disagree. 42 As the Ratzlaf Court pointed out, structuring financial transactions is not an inevitably nefarious activity: Every day, law abiding citizens structure transactions to avoid the impact of a regulation or a tax without running afoul of the law. --- U.S. at ----, 114 S.Ct. at 661. For evidence that such activities are quite often legal, we need look no further than the antistructuring law Wynn was convicted of violating. In 1970, Congress imposed reporting requirements on financial institutions and made their failure to report certain cash transactions a crime. It was not until 1987, however, that Congress made it a crime to structure transactions so as to avoid the triggering of these requirements. See Sarah N. Welling, Smurfs, Money Laundering, and the Federal Criminal Law: The Crime of Structuring Transactions, 41 Fla.L.Rev. 287, 288 (1989). That the structuring activity undertaken by Wynn was completely legal prior to 1987 suggests that the fact that he violated the antistructuring law cannot, without more, logically constitute proof that he had knowledge of the law. If anything, evidence that a person performed an act that is not inevitably nefarious would seem to suggest the opposite conclusion: that he was unaware the action was illegal. 43 The Supreme Court explicitly based Ratzlaf on the proposition that, while ignorance of the law generally is no excuse, Congress may decree otherwise and has done so by requiring proof of willfulness before the imposition of criminal penalties for structuring activity. --- U.S. at ----, 114 S.Ct. at 663. Permitting a violation of the law--i.e., structuring--alone to serve as sufficient evidence of knowledge of the law would effectively merge the two elements and deprive Congress of this privilege. The jury, of course, may infer knowledge of the law from circumstantial evidence, but for the willfulness requirement to be more than essentially ... surplusage, id. at ----, 114 S.Ct. at 659, that evidence must suggest knowledge of the antistructuring law as distinct from knowledge of financial institutions' reporting requirements. See, e.g., United States v. Retos, 25 F.3d 1220, 1231 (3d Cir.1994) (reversing structuring conviction due to improper jury instruction but finding that, as defendant was an attorney, the jury could conclude he knew his structuring actions were unlawful); United States v. Dichne, 612 F.2d 632, 636-37 (2d Cir.1979) (upholding conviction for willfully violating a currency reporting statute where the Government posted notices in airport departure area that the law required travelers to report the transport of $5000 or more out of the country). We can find nothing in the record that suggests that Wynn knew that his structuring activity was criminal. 44 We recognize, as did the Ratzlaf dissent, that the Court's statutory interpretation could render prosecutions under section 5324, as it was then written, more difficult. Ratzlaf, --- U.S. at ---- - ----, 114 S.Ct. at 669-70 (Blackmun, J., dissenting). It would appear that this observation was not lost on Capitol Hill. Following Ratzlaf, Congress passed the Riegle Community Development and Regulatory Improvement Act, which added a criminal penalty provision to section 5324 that avoids any reference to willfulness. Pub.L. No. 103-325, Sec. 411, 108 Stat. 2160, 2253 (1994). Nonetheless, we are required to apply to Wynn the law in force at the time he purchased the cashier's checks.