Opinion ID: 524661
Heading Depth: 2
Heading Rank: 2

Heading: Concealing and Falsifying Material Facts on CTRs

Text: 40 Counts 10 and 11 of the indictment charge Bucey with causing the concealment and falsification of material facts within the jurisdiction of the IRS in violation of 18 U.S.C. sections 2(b) and 1001. 20 Under section 1001, concealment violations relate to the nondisclosure of statements required by statute, government regulation or form. United States v. Tobon-Builes, 706 F.2d 1092, 1096 (11th Cir.1983) (citations omitted). During each deposit transaction at Freedom Federal on January 6, 1986, and February 20, 1986, Bucey completed the required CTR on Form 4789, which was prescribed by the Secretary of the Treasury. See 31 C.F.R. Sec. 103.25(a). Part I of Form 4789 requests the identity of the individual conducting the transaction with the financial institution, while Part II requests the identity of the individual or organization for whom this transaction was completed. See Appellant's App. at 58, 60. 21 Bucey listed himself as the individual conducting the transaction and Huguenot National Church as the individual or organization for whom the transaction was completed. See id. The indictment charges that, by completing the form in this manner, Bucey intentionally concealed the true identity of the individual who conducted the transaction and the individual for whom the transaction was completed. See Indictment paragraphs 3, 4 at 25, paragraphs 3, 4 at 26. In response to Bucey's motion to dismiss these counts of the indictment for failure to state an offense, the district court cursorily determined that the allegations of active concealment of material facts that were required to be disclosed sufficiently stated a criminal offense. 41 The government submits that, based upon the evidence established at trial, a jury could have rationally concluded that the individual who conducted the transaction in each instance was the undercover agent, not Bucey, and that, therefore, Bucey had lied in completing Form 4789. The government relies primarily on the evidence that the agent physically carried the money into the bank, assisted in counting it, and received cashier's checks as a result of the transaction. We do not think these facts are probative. While the agent may have carried the money into the bank, it was Bucey who was responsible for carrying out the money laundering operation, who received a commission for his services, who controlled the Huguenot Church account and who was solely authorized to make the necessary deposits. Therefore, we do not think a rational juror could have found beyond a reasonable doubt that Bucey willfully concealed or falsified a material fact when he listed himself as the individual conducting the transaction with the bank. 42 A closer question is whether Part II of Form 4789 required Bucey to disclose that the agents were the individual[s] or organization for whom this transaction was completed. In essence, the issue is whether Bucey had a duty to reveal the source of the funds involved in the transaction. 43 In United States v. Gimbel, 632 F.Supp. 713, 721 n. 10 (E.D. Wis.1984), rev'd on other grounds, 830 F.2d 621 (7th Cir.1987), the district court held that the law did not require the defendant, an attorney engaged in money laundering, to disclose on CTRs the real parties in interest in connection with currency transactions. In dismissing this count of the indictment, the court concluded: 44 Under the plain meaning of the regulations implementing the Bank Secrecy Act, Gimbel and others similarly situated would not have notice that they must reveal the identities of the real parties in interest to domestic currency transactions made through their trust accounts. 45 Id. at 723. 46 Similarly, in United States v. Murphy, 809 F.2d 1427 (9th Cir.1987), the Ninth Circuit held that the law did not clearly impose a duty on the defendant to disclose the source of the funds on CTR Form 4789. In Murphy, the defendant was charged with conspiring to conceal and falsify material facts within the jurisdiction of the IRS by falsely identifying the source of the deposited funds as ATC, although he knew the money came from undercover IRS agents. Id. at 1429. The court noted that ATC had an account at the bank where the money was deposited, and that an ambiguity in the instructions on the CTR could reasonably lead a depositor to fill out the form as the defendant did in the challenged transaction. 22 The court concluded that the directions on Form 4789 could easily lead noncriminal participants in CTR transactions to believe that they were required only to name the holder of the account. Id. at 1431. As the Murphy court reasoned: 47 Due process requires that penal statutes define criminal offenses with sufficient clarity that an ordinary person can understand what conduct is prohibited. Kolender v. Lawson, 461 U.S. 352, 357 [103 S.Ct. 1855, 1858, 75 L.Ed.2d 903] (1983). Section 5313 and its regulations do not clearly require depositors to identify the source of their funds. Therefore, the imposition of criminal sanctions on these facts would violate due process. Cf. Varbel, 780 F.2d at 762. 48 Murphy, 809 F.2d at 1431. 49 We agree with the reasoning and result of the Ninth Circuit in Murphy and the district court in Gimbel. Bucey deposited cash into the Huguenot Church account and, accordingly, listed the church as the organization for whom this transaction was completed. We do not think the language of the statute, regulations or Form 4789 was sufficiently clear for an ordinary person to understand that listing the undercover agents was required. Thus, because neither Bucey nor the bank had a duty to report the source of the money in Part II of Form 4789, there was no concealment or falsification of material facts in violation of 18 U.S.C. sections 2(b) and 1001. Accordingly, Bucey's conviction for this offense must be reversed and counts 10 and 11 dismissed.