Opinion ID: 791968
Heading Depth: 3
Heading Rank: 1

Heading: The Federal Law Prohibiting Structuring

Text: 22 Preliminary to discussing the evidence from which a reasonable jury could have found the requisite knowledge and intent proved in this case, we briefly review the evolution of federal law prohibiting structuring. 23 In 1970, Congress enacted the Currency and Foreign Transactions Reporting Act (CFTRA or the Act), Pub.L. No. 91-508, Tit. II, 84 Stat. 1118, also referred to as the Bank Secrecy Act, which requires, inter alia, that domestic financial institutions report to the Internal Revenue Service any cash transactions exceeding $10,000, see id. § 221, 84 Stat. at 1122 (current version at 31 U.S.C. § 5313(a)); 31 C.F.R. § 103.22(b). Underlying this legislation was Congress's recognition of the importance of reports of large and unusual currency transactions in ferreting out criminal activity. California Bankers Ass'n v. Shultz, 416 U.S. 21, 38, 94 S.Ct. 1494, 39 L.Ed.2d 812 (1974) (citing legislative history); see also United States v. Scanio, 900 F.2d 485, 487 (2d Cir.1990) (further discussing legislative history). No criminal predicate as to the source of cash in excess of $10,000 was required to prosecute those who failed to comply with the specified reporting requirements. See CFTRA § 209, 84 Stat. at 1121 (establishing criminal penalty for willful violations of the Act). 24 Prior to 1986, the law did not explicitly prohibit persons from structuring cash transactions so that no one transaction exceeded $10,000 in an effort to avoid CTR filings. Although such structuring was sometimes prosecuted under 18 U.S.C. § 371 as a scheme to defraud the United States, see, e.g., United States v. Winfield, 997 F.2d 1076, 1082-83 (4th Cir.1993); United States v. Nersesian, 824 F.2d 1294, 1309-10 (2d Cir.1987), in 1986, Congress decided to address the problem directly by specifically criminalizing structuring in the Money Laundering Control Act § 1354(a), Pub.L. No. 99-570, Tit. I, Subtit. H, 100 Stat. 3207, 3207-22 (codified as amended at 31 U.S.C. § 5324). Title 31 U.S.C. § 5324 states, in pertinent part: 25 No person shall, for the purpose of evading the reporting requirements of section 5313(a) ... or any regulation prescribed under any such section ... (3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions. 26 31 U.S.C. § 5324(a). The applicable regulations define structuring by reference to both the actus reus and mens rea elements of § 5324(a): 27 [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. The transaction or transactions need not exceed the $10,000 reporting threshold at any single financial institution on any single day in order to constitute structuring within the meaning of this definition. 28 31 C.F.R. § 103.11(gg). 29 Originally, only a person who willfully violated the prohibition on structuring was subject to criminal penalties. CFTRA § 209, 84 Stat. at 1121 (codified at 31 U.S.C. § 1058, repealed and replaced by Act of Sept. 13, 1982 §§ 1, 5(b), Pub.L. No. 97-258, 96 Stat. 877, 1000, 1081 (codified as amended at 31 U.S.C. § 5322(a) (1994))). This court construed this willfulness element to require proof that a defendant, with knowledge of the reporting requirement imposed by law, structured a currency transaction intend[ing] to deprive the government of information to which it is entitled. United States v. Scanio, 900 F.2d at 491. In Ratzlaf v. United States, the Supreme Court took a different view, ruling that structuring was willful only if the government further proved that the defendant acted with knowledge that his conduct was unlawful. 510 U.S. 135, 137, 114 S.Ct. 655, 126 L.Ed.2d 615 (1994). Within the year, Congress responded by eliminating willfulness as an element necessary to convict a person of structuring in violation of § 5324. See Riegle Community Development and Regulatory Improvement Act of 1994 § 411, Pub.L. No. 103-325, 108 Stat. 2160, 2253 (codified as amended at 31 U.S.C. §§ 5322(a), (b), 5324(c)). The net result, as this court has previously observed, was to conform federal anti-structuring law to the Scanio interpretation. United States v. Simon, 85 F.3d 906, 909 n. 3 (2d Cir.1996). 30 Because the conduct at issue in this case all occurred well after 1994, we look to Scanio to identify the three elements that the government was required to prove beyond a reasonable doubt to convict MacPherson of the charged § 5324 offense: (1) the defendant must, in fact, have engaged in acts of structuring; (2) he must have done so with knowledge that the financial institutions involved were legally obligated to report currency transactions in excess of $10,000; and (3) he must have acted with the intent to evade this reporting requirement. See id.; see also 3 Leonard B. Sand et al., Modern Federal Jury Instructions: Criminal, Instruction 50B-21 (2004). 5 31 2. The Circumstantial Evidence Supported an Inference of MacPherson's Knowledge of and Intent to Evade Currency Reporting Requirements 32 As noted in our discussion of the case's procedural history, MacPherson did not argue in the district court, nor does he assert in opposition to the government's appeal, that the trial evidence was insufficient to permit a reasonable jury to find the first element of a § 5324 offense — acts of structuring — proved beyond a reasonable doubt. Indeed, the evidence would not support such an argument. Instead, MacPherson argued, and it appears the district court concluded, that the government's proof failed at the second and third elements: knowledge and intent. Accordingly, we focus our sufficiency discussion on these two aspects of mens rea. 33
34 The record is devoid of any direct evidence that MacPherson knew of or intended to evade the reporting requirements for cash transactions exceeding $10,000. The law, however, recognizes that the mens rea elements of knowledge and intent can often be proved through circumstantial evidence and the reasonable inferences drawn therefrom. See, e.g., Ratzlaf v. United States, 510 U.S.135, 149 n. 19, 114 S.Ct. 655, 126 L.Ed.2d 615 (1994) (noting that jury may, of course, find the requisite knowledge on defendant's part by drawing reasonable inferences from the evidence of defendant's conduct); United States v. Salameh, 152 F.3d 88, 143 (2d Cir.1998) (recognizing that as a general rule most evidence of intent is circumstantial); United States v. Nersesian, 824 F.2d at 1314 (noting that `finding of knowledge that is largely inferential is not impermissible' (quoting United States v. Sheiner, 410 F.2d 337, 340 (2d Cir.1969))). Indeed, the law draws no distinction between direct and circumstantial evidence in requiring the government to carry its burden of proof. See United States v. Glasser, 443 F.2d 994, 1006-07 (2d Cir.1971). A verdict of guilty may be based entirely on circumstantial evidence as long as the inferences of culpability drawn from the circumstances are reasonable. See United States v. Morgan, 385 F.3d 196, 204 (2d Cir.2004). The possibility that inferences consistent with innocence as well as with guilt might be drawn from circumstantial evidence is of no matter to sufficiency analysis because it is the task of the jury, not the court, to choose among competing inferences. Id. (internal quotation marks omitted); see United States v. Autuori, 212 F.3d 105, 114 (2d Cir.2000) (noting that where either of the two results, a reasonable doubt or no reasonable doubt, is fairly possible, the court must let the jury decide the matter (internal quotation marks and brackets omitted)). Indeed, in United States v. Nersesian, 824 F.2d at 1314, discussed further infra Part II.B.2.b, this court specifically rejected the argument that possible innocent explanations for certain events precluded a jury from drawing therefrom a reasonable inference that the defendant possessed the requisite knowledge of and intent to evade currency reporting requirements. 35 Applying these principles to this case, we conclude that the totality of circumstantial evidence permitted a jury to find beyond a reasonable doubt that MacPherson engaged in the charged structuring with the requisite guilty knowledge and intent. Specifically, the jury could have reasonably inferred from the pattern of MacPherson's structuring, as well as from the record of his earlier cash withdrawals that did generate CTR filings, that MacPherson knew of and, in connection with the charged deposits, intended to evade currency reporting requirements. 36 b. The Pattern of MacPherson's Cash Transactions Supported a Jury Inference of Knowledge and Intent 37 (1) United States v. Nersesian Recognizes that Knowledge of and Intent to Evade Reporting Requirements Can Be Inferred from a Pattern of Structured Transactions 38 The government submits that the jury could have inferred MacPherson's guilty knowledge and intent from the pattern of his structured transactions. This argument finds support in our decision in United States v. Nersesian. See id. at 1314-15. In that case, a defendant and co-conspirators had used $117,000 in cash to purchase more than one hundred $1,000 money orders at numerous banks throughout New York City over a one-month period. See id. at 1309. In challenging the sufficiency of the evidence supporting his conviction for conspiring to defraud the government by engaging in cash transactions aimed at avoiding currency reporting requirements, see 18 U.S.C. § 371, the Nersesian defendant argued that the pattern of his transactions could not support an inference that he knew of and intended to evade CTR filing requirements. See United States v. Nersesian, 824 F.2d at 1310. He specifically noted that his money order purchases did not fall just short of the $10,000 reporting trigger, no evidence indicated that he had ever been alerted to the CTR filing requirement, and certain evidence in the case was actually inconsistent with such knowledge. Id. at 1314. This court acknowledged that the evidence does permit the inference that [the defendant] did not know of the reporting requirements. Id. Nevertheless, given the pattern of transactions, the court could not conclude that the evidence was insufficient to permit  any rational trier of fact to find knowledge and intent: The jury could have inferred from the fact that [the defendant] chose to carry out his currency exchanges in a series of small transactions over a number of days, rather than in a single transaction or several larger transactions, that he knew of the reporting requirements and was attempting to avoid them. Id. at 1314-15 (emphasis in original); see also United States v. Winfield, 997 F.2d at 1082 (holding, in § 371 prosecution, that defendant's knowledge of the currency reporting requirements may be inferred from the surrounding circumstances). 39 (2) Nersesian's Reasoning Supports the Jury Verdict in This Case 40 Applying Nersesian 's reasoning to this case, we conclude that the jury that convicted MacPherson could have reasonably inferred from the fact that the defendant chose to deposit a quarter-million dollars through a series of thirty-two small transactions all under $10,000 that he knew of the reporting requirements applicable to cash transactions over $10,000 and was intent on avoiding them. The trial evidence indicated that the $258,100 at issue did not represent income earned during the four-month period so as to require multiple deposits. Rather, the evidence suggested that the cash was a long-held asset that MacPherson had shielded for some years from a possible tort judgment. Once the tort suit was settled in September 2000, MacPherson apparently concluded that there was no further risk in placing this cash in bank accounts traceable to him. Nevertheless, he deliberately decided not to deposit the money in one lump sum or even through several five-figure transactions. Instead, he employed the more burdensome technique of thirty-two separate transactions, no one of which exceeded $10,000. As the Seventh Circuit observed in a similar context, it is unlikely, to the point of absurdity, that it was pure coincidence that a defendant would engage in multiple transactions, all under $10,000, to achieve his purpose. United States v. Cassano, 372 F.3d 868, 879 (7th Cir.2004) (referring to fifty-one checks under $10,000 cashed by the defendant), vacated on other grounds, ___ U.S. ___, 125 S.Ct. 1018, 160 L.Ed.2d 1037 (2005) (citing United States v. Booker, ___ U.S. ___, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005)). 41 That MacPherson's avoidance of five-figure transactions was calculated rather than coincidental is evidenced by the fact that twenty-three deposits were in amounts of $9,000-$9,200. Indeed, in six out of seven consecutive weeks, MacPherson traveled to three different banks on the same day to make identical deposits of $9,000, thereby providing even stronger circumstantial evidence than existed in Nersesian that the defendant knew of and was intent on avoiding the $10,000 trigger for CTR filings. Cf. United States v. Nersesian, 824 F.2d at 1314 (rejecting argument that knowledge and intent could not be inferred because monies were not structured in amounts just short of the reporting trigger). In sum, MacPherson's willingness to sacrifice efficiency and convenience in depositing a quarter-million dollars through multiple small transactions structured to ensure that no one exceeded $10,000 amply supported a reasonable inference that MacPherson knew of and was intent on avoiding CTR reporting requirements. See generally United States v. Gibbons, 968 F.2d 639, 645 (8th Cir.1992) (observing that, because receipt and cashing of six checks would have been less efficient and convenient than receiving and cashing one, it is difficult to explain this change except that Gibbons sought to evade the reporting requirements). As such, the jury verdict of guilty should not have been set aside. 42 (3) MacPherson's Arguments for Not Applying Nersesian's Reasoning to This Case Are Unconvincing 43 In urging affirmance of the district court's judgment of acquittal, MacPherson submits that Nersesian 's reasoning is inapplicable to his case because the Nersesian defendant was convicted of violating 18 U.S.C. § 371, which did not require the government to prove the elements of structuring under 31 U.S.C. § 5324. We are not convinced. Although the first element of a § 5324 offense — acts of structuring as defined in 31 C.F.R. § 103.11(gg) — may not have been an element of the § 371 charge in Nersesian, as we have already noted, the sufficiency of the government's proof as to that § 5324 element is not here at issue. As to the remaining knowledge and intent elements of § 5324, they are, in fact, identical to the mens rea elements in Nersesian. As this court there observed, to convict the defendant of the charged § 371 conspiracy, the government was required to prove that he knew there was a reporting requirement for currency transactions in excess of $10,000 and intended to evade that requirement. United States v. Nersesian, 824 F.2d at 1314. Precisely because Nersesian addressed the same mens rea elements as are here at issue, its recognition that knowledge and evasive intent could reasonably be inferred from the pattern of structured transactions is appropriately applied to sufficiency review in this case. 44 This conclusion is reinforced by the fact that, even when the government's mens rea burden in a § 5324 prosecution was heavier, requiring proof of willfulness as defined in Ratzlaf, this court ruled that a jury could infer the requisite knowledge of illegality from the pattern of structured transactions. In United States v. Simon, we stated that a reasonable jury could infer that the extensive efforts undertaken by the defendant in structuring his cash deposits undoubtedly were based on the knowledge that his conduct was unlawful. 85 F.3d at 910 (internal quotation marks and brackets omitted). MacPherson submits that Simon is distinguishable because the defendant in that case conceded his knowledge of and intent to evade the currency reporting requirements; his sufficiency challenge went only to the element of willful illegality. But, as the government convincingly argues in response, evidence sufficient to establish willful illegality necessarily supports the lesser scienter requirement at issue in this case. Thus, we conclude that it does not matter whether a structuring defendant's sufficiency challenge focuses on his knowledge of CTR filing requirements, his intent to evade these requirements, or (in the case of pre-amendment offenses) his knowledge that such evasion was illegal; as Nersesian and Simon make plain, a reasonable jury may well be able to infer the necessary mens rea from the pattern of structured cash transactions. See also United States v. Cassano, 372 F.3d at 879; United States v. Beidler, 110 F.3d 1064, 1069 (4th Cir.1997) (holding that evidence that a defendant has structured currency transactions in a manner indicating a design to conceal the structuring activity itself, alone or in conjunction with other evidence of the defendant's state of mind, may support a conclusion that the defendant knew structuring was illegal (emphasis added)); United States v. Wynn, 61 F.3d 921, 927 (D.C.Cir.1995) (holding that defendant's purchase of multiple cashier's checks in amounts less than $10,000 to conduct transactions in larger amounts created an inference that he was motivated to avoid the reporting requirement); United States v. Gibbons, 968 F.2d at 645; cf. United States v. Bringier, 405 F.3d 310, 314-15 (5th Cir.2005) (holding that pattern of transactions and other evidence are sufficient to support structuring conviction). Because this is such a case, the jury verdict of guilty should not have been set aside. 45 In a final attempt to avoid application of Nersesian to this case, MacPherson argues that, in Nersesian and many of the other cases just cited, the cash at issue was criminally derived, which is not a contention in his case. Certainly, the criminal origin of structured funds, to the extent it provides a motive for concealment from government authorities, may constitute an additional circumstance from which a jury can infer a defendant's knowledge of and intent to avoid CTR filings. But proof of criminal derivation was not necessary to secure a § 371 conviction in Nersesian, and this court did not reference this fact in concluding that the pattern of defendant's structured transactions was sufficient to support a jury inference of guilty knowledge and intent. Thus, we decline MacPherson's invitation to limit Nersesian 's reasoning to cases involving criminal proceeds. The anti-structuring law may well have been intended to prevent criminals from concealing their illicit profits, but that is not the limit of its reach. Section 5324 makes no reference to the source of the monies at issue or to the reason why a person seeks to avoid CTR filing. Its singular focus is on the method employed to evade that filing requirement, i.e., structuring. See generally United States v. Gibbons, 968 F.2d at 645 (rejecting as immaterial defendant's argument that his motive for structuring was to conceal the source of money from his ex-wife rather than the government); cf. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 499-500, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985) (concluding that RICO liability is not confined to businesses infiltrated by organized crime); United States v. Morris, 928 F.2d 504, 511 (2d Cir.1991) (holding that, although law criminalizing unauthorized access of certain federal computers was aimed at particular defendants, coverage was not limited to them); United States v. Romano, 684 F.2d 1057, 1063-64 (2d Cir.1982) (recognizing that the prohibitions in 18 U.S.C. § 1954 extend beyond the kickbacks that prompted the statute's enactment). If a defendant structures cash transactions knowing that the financial institution involved is obligated to report transactions exceeding $10,000 and intending to evade that requirement, he is guilty of structuring without regard to whether the cash at issue represents criminal or lawful proceeds. More to the point, whether or not a § 5324 prosecution relates to criminal proceeds, a jury may properly consider the pattern of structuring activities and draw reasonable inferences therefrom as to whether the defendant possessed the requisite mens rea. 46 c. MacPherson's Prior Cash Transactions Prompting CTR Filings Further Supported the Jury Inference of Knowledge 47 Although the pattern of MacPherson's structured deposits, by itself, provided evidence from which a reasonable jury could have inferred his knowledge of and intent to evade currency reporting requirements, that conclusion was reinforced by circumstantial evidence that MacPherson acquired knowledge of CTR filing requirements in 1998 and 1999 when his four cash withdrawals of sums ranging from $40,000 to $80,000 prompted Citibank to file CTRs. Although no bank employee specifically recalled dealing with MacPherson at the time of these withdrawals, bank manager Edith Steuerman, who filled out part of the CTR relating to the $80,000 withdrawal, testified that it was her practice to prepare the document sitting across the desk from the customer while she obtained necessary identifying information from him. In initially denying MacPherson's Rule 29(a) motion, the district court concluded that Steuerman's testimony could support a jury inference that MacPherson thereby acquired knowledge of the reporting requirement for cash transactions exceeding $10,000. We agree and conclude that this evidence strongly reinforces the inference that a jury could reasonably draw from MacPherson's careful structuring of his subsequent cash deposits: he was intent on avoiding any further CTR filings with respect to his money movements. 48 MacPherson argues that, in fact, Steuerman's testimony only supports an inference that he knew some sort of form had to be filled out with respect to his $80,000 withdrawal. But without specific knowledge that the form was required by the government, as opposed to the bank itself, he asserts there could be no intent to evade government reporting requirements. To support this argument, MacPherson cites United States v. Baydoun, 984 F.2d 175 (6th Cir.1993). In that case, the defendant presented $16,700 in cash for deposit. See id. at 177. When told by a teller that she would have to fill out a form for a deposit over $10,000, the defendant reduced his transaction to $3,000, depositing the rest of the money in small amounts over the next two days. See id. The Sixth Circuit, observing that the bank teller had not told the defendant that the required form was a CTR, concluded that [t]here is no evidence in the record that defendant had the intent to deprive the government of anything or to structure currency transactions to evade the reporting requirements of 31 U.S.C. § 5324(3). Id. at 181. 49 We need not here decide whether we would adopt Baydoun 's reasoning in a case with comparable facts. The record in this case presents considerably more circumstantial evidence than was present in Baydoun to support an inference that MacPherson's 1998-99 bank transactions afforded him knowledge of CTR filing requirements. That evidence, viewed in the light most favorable to the government, reveals that, on January 21, 1998, Steuerman did not simply tell MacPherson that she would have to fill out some form in connection with his $80,000 cash withdrawal; she actually filled out that form in his presence: government Form 4789 Currency Transaction Report. Further, on August 31, 1999, when MacPherson went to three separate Citibank branches to withdraw a total of $140,000 in cash, three further CTR forms were completed. The likelihood that on these occasions, as in 1998, MacPherson witnessed the preparation of the documents, is evidenced by his production of personal identification, which was then noted on the form. More to the point, a reasonable jury could certainly infer that it was improbable in the extreme that MacPherson, a New York City police officer, would have repeatedly gone through these identification procedures (three times on one day) without knowing their purpose. Indeed, the possibility of naive ignorance is rendered all the more unlikely by the fact that MacPherson, as a licensed real estate salesperson, would himself have been required to file CTRs in connection with cash business transactions. See generally United States v. Simon, 85 F.3d at 911 (noting that, because defendant was a stockbroker required to file currency transaction reports in connection with his own business, [t]he jury reasonably could have inferred that [he] possessed the knowledge and sophistication to understand that his own conduct was unlawful). 6 Thus, for reasons that go beyond even those articulated by the district court when it denied MacPherson's Rule 29(a) motion, we conclude that a reasonable jury could have inferred from the totality of circumstances surrounding MacPherson's 1998-99 cash withdrawals that, by that time, the defendant knew that cash transactions exceeding $10,000 had to be reported to the government. 50 When the circumstances of MacPherson's CTR-triggering withdrawals are reviewed together with the pattern of his charged structured deposits in the light most favorable to the government, we cannot conclude that this evidence was insufficient to permit any rational jury to find that MacPherson knew of and intended to evade currency reporting requirements when he engaged in the charged structuring.