Court Opinion

ID: 216369
Source: CourtListenerOpinion
Date Created: 2011-05-09 19:06:44+00
Date Added: 2024-06-11T17:28:28.161236
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS
              FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,               
                 Plaintiff-Appellant,
                 v.
$79,650.00 SEIZED FROM BANK OF
AMERICA ACCOUNT ENDING IN 8247,
at Bank of America, 7400 Little
River Turnpike, Annandale,                 No. 10-1291
Virginia, in the Name of Girma
Afework,
                Defendant-Appellee,
GIRMA AFEWORK,
        Claimant-Party in Interest.
                                        

UNITED STATES OF AMERICA,               
                  Plaintiff-Appellee,
                 v.
$79,650.00 SEIZED FROM BANK OF
AMERICA ACCOUNT ENDING IN 8247,
at Bank of America, 7400 Little
River Turnpike, Annandale,                 No. 10-1294
Virginia, in the Name of Girma
Afework,
                Defendant-Appellee,
GIRMA AFEWORK,
                Claimant-Appellant.
                                        
2        UNITED STATES v. $79,650.00 SEIZED FROM BANK
        Appeals from the United States District Court
      for the Eastern District of Virginia, at Alexandria.
             Ivan Darnell Davis, Magistrate Judge.
                     (1:08-cv-01233-IDD)

                  Argued: January 27, 2011

                    Decided: May 9, 2011

    Before TRAXLER, Chief Judge, and KING and WYNN,
                     Circuit Judges.

No. 10-1291 vacated and remanded; No. 10-1294 affirmed by
published opinion. Judge King wrote the opinion, in which
Chief Judge Traxler and Judge Wynn joined.

                         COUNSEL

ARGUED: Gordon D. Kromberg, OFFICE OF THE
UNITED STATES ATTORNEY, Alexandria, Virginia, for
the United States. Richard E. Gardiner, Fairfax, Virginia, for
Party in Interest. ON BRIEF: Neil H. MacBride, United
States Attorney, Karen Ledbetter Taylor, Assistant United
States Attorney, OFFICE OF THE UNITED STATES
ATTORNEY, Alexandria, Virginia, for the United States.

                          OPINION

KING, Circuit Judge:

   Following civil forfeiture proceedings in the Eastern Dis-
trict of Virginia, the government has appealed from the dis-
trict court’s post-judgment order of January 15, 2010,
          UNITED STATES v. $79,650.00 SEIZED FROM BANK                    3
reducing on Eighth Amendment grounds the forfeiture judg-
ment from $79,650 to $50,000. See United States v.
$79,650.00 Seized from Bank of Am. Account Ending in 8247,
No. 1:08-cv-01233 (E.D. Va. Jan. 15, 2010) (the "Order").1
Girma Afework, the claimant-party in interest, has cross-
appealed, seeking relief from the court’s judgment of Decem-
ber 8, 2009, ruling that he engaged in currency structuring, a
federal offense warranting the forfeiture. See United States v.
$79,650.00 Seized from Bank of Am. Account Ending in 8247,
No. 1:08-cv-01233 (E.D. Va. Dec. 8, 2009) (the "Judgment").2
As explained below, we reject Afework’s cross-appeal (No.
10-1294) and affirm the court’s determination that he commit-
ted multiple instances of currency structuring. With respect to
the government’s appeal (No. 10-1291), however, we con-
clude that the court misperceived the authorized penalty for
purposes of its Eighth Amendment proportionality analysis,
and thus vacate the Order and remand.

                                     I.

                                    A.

   During 2006 and 2007, Girma Afework, an Ethiopian citi-
zen residing in the Eastern District of Virginia, maintained
bank accounts at PNC Bank and Bank of America. On April
2, 2007, Afework presented himself at a branch of PNC Bank
in Fairfax, Virginia, intending to deposit $79,650 in cash (the
"Defendant Money," or the "Money"). While there, Afework
was told that a cash deposit of more than $10,000 would
require, pursuant to an applicable banking regulation, the
bank’s completion of a form. To avoid having the bank com-
plete the form, Afework deposited only $9900. He made
another $9900 currency deposit later that same day at a Fair-
fax branch of Bank of America. Afework then deposited the
  1
     The Order is found at J.A. 180. (Citations herein to "J.A. __" refer to
the contents of the Joint Appendix filed by the parties in this appeal.)
   2
     The Judgment is found at J.A. 22.
4         UNITED STATES v. $79,650.00 SEIZED FROM BANK
balance of the Defendant Money by making similar cash
deposits — one per day at each of the two banks — on April
3, 4, and 5, 2007. Afework thus engaged in eight separate cur-
rency transactions at the two banks, ranging in amount from
$9900 to $9980, thereby managing to fully deposit the Money
without causing the banks to file any forms. In April and May
2007, Afework consolidated the entirety of the Money into a
single account at Bank of America.

                                     B.

   On February 21, 2008, the Postal Inspectors executed a
warrant for an arrest in rem, seizing the Defendant Money
from Bank of America. Several months later, on November
26, 2008, the government filed its Complaint for forfeiture of
the Money, pursuant to 31 U.S.C. § 5317(2), alleging that the
currency deposits of the Money were illegally structured by
Afework, in contravention of 31 U.S.C. § 5324.3 On Decem-
ber 30, 2008, Afework asserted an interest in the Money, fil-
ing a claim pursuant to Rule G(5)(a)(i) of the Supplemental
Rules for Admiralty or Maritime Claims and Asset Forfeiture
Actions, which provides that "[a] person who asserts an inter-
est in the defendant property may contest the forfeiture by fil-
ing a claim in the court where the action is pending."

   The magistrate judge thereafter denied the parties’ respec-
tive dispositive motions and, on December 8, 2009, conducted
a bench trial.4 The government called three trial witnesses:
    3
     Section 5324 of Title 31, which is entitled "Structuring transactions to
evade reporting requirement prohibited," provides in subsection (a)(3) that
no person shall "structure or assist in structuring, or attempt to structure
or assist in structuring, any [currency] transaction with one or more
domestic financial institutions." Under § 5317(2), "[a]ny property
involved in a violation of section [5324] may be seized and forfeited to the
United States."
   4
     On June 5, 2009, pursuant to 28 U.S.C. § 636(c) and Federal Rule of
Civil Procedure 73, the parties consented to the exercise of jurisdiction by
the magistrate judge. As a result, the relevant proceedings in the district
court were handled and disposed of by the magistrate judge.
           UNITED STATES v. $79,650.00 SEIZED FROM BANK                       5
Secret Service Agents Scott McGuckin and Rodney Smith,
plus Afework himself. Agent McGuckin testified regarding,
inter alia, his analysis of Afework’s bank accounts, and Agent
Smith testified about his investigative interview of Afework
concerning his currency transactions. Importantly, Agent
Smith explained that Afework had previously engaged in sim-
ilar currency structuring activities. More specifically, seven
months prior to the activities on trial, on October 27, 2006,
Afework had made three cash deposits, two of $9000 and one
of $2000, at the same banks where he engaged in his April
2007 currency transactions. Afework acknowledged having
discussions with the various bank tellers in April, and testified
about the reporting requirements and the extent of his aware-
ness that banks are obligated to report currency transactions
in excess of $10,000. Because this forfeiture proceeding is
civil in nature, the government was obliged to prove at trial
the predicate § 5324 offenses by a preponderance of the evi-
dence. See United States v. Liquidators of European Fed.
Credit Bank, 630 F.3d 1139, 1150 (9th Cir. 2011) (citing
United States v. One Assortment of 89 Firearms, 465 U.S.
354, 361-62 (1984)).

   At the trial’s conclusion, the magistrate judge ruled from
the bench, first explaining that a § 5324 offense has three ele-
ments, which he identified as follows: (1) that "a person
knowingly structured, attempted to structure, [or] assisted in
structuring a currency transaction"; (2) that "the person knew
of the domestic financial institution’s legal obligation to
report transactions in excess of $10,000"; and (3) that "the
purpose of the structured transaction was to evade that report-
ing obligation." J.A. 104-05.5 Relevant to this appeal, the
  5
    The elements identified by the magistrate judge conform in substance
with the Supreme Court’s explanation of § 5324 in Ratzlaf v. United States
that "[i]t is illegal to structure transactions . . . for the purpose of evading
a financial institution’s reporting requirement." 510 U.S. 135, 136 (1994).
The magistrate judge did not explicitly address the Ratzlaf Court’s imposi-
tion of the additional requirement that a violation of § 5324 be willful, that
6         UNITED STATES v. $79,650.00 SEIZED FROM BANK
judge found, as to the second of those elements, that "Afe-
work knew of the domestic financial institution’s legal obliga-
tion to report transactions in excess of $10,000." Id. at 114.
The judge premised this finding primarily on Agent Smith’s
testimony that Afework had admitted knowing that "there was
a . . . banking regulation form," see id. at 53, as well as Afe-
work’s own testimony, which (although contradictory)
revealed his knowledge that the reporting form had to be com-
pleted pursuant to a banking regulation, see id. at 112.6 Addi-
tionally, as to the third element, the judge found that,
"because [Afework] had such knowledge and he continued to
deposit these amounts over a period of time in less than
$10,000[,] . . . [his] purpose . . . was . . . evading the reporting
obligation by both PNC and Bank of America banks." Id. at
114-15. The judge thus ruled that the requirements of § 5324
were satisfied and that forfeiture of the Defendant Money was
warranted. It then entered its Judgment of December 8, 2009,
ordering that the United States recover the Money from Afe-
work.

is, "the Government must prove that the defendant [here, claimant Afe-
work] acted with knowledge that his conduct was unlawful." Id. at 137.
Afework does not complain of any such omission, however, and, as
explained below, the evidence was sufficient for the judge to find that
Afework’s conduct satisfied each and every element of a § 5324 offense.
    6
    As the magistrate judge explained, Afework initially "said that the
teller did not tell him that . . . the form was required by a banking regula-
tion"; however, Afework later "changed his testimony . . . and said that the
PNC teller told him it was a banking regulation." J.A. 112. Furthermore,
the judge emphasized that Afework had no answer when asked why he
had, after his first $9900 deposit on April 7, 2007, at PNC Bank, struc-
tured his second deposit of the day at Bank of America, though he had
previously asserted his belief that each bank had its own rules and there
was no reason for him to think that Bank of America had the same report-
ing rule as PNC Bank. See id. at 113.
          UNITED STATES v. $79,650.00 SEIZED FROM BANK                 7
                                   C.

   During the trial, Afework had asserted that the Excessive
Fines Clause of the Eighth Amendment barred forfeiture of
the Money. See U.S. Const. amend. VIII (providing that
"[e]xcessive bail shall not be required, nor excessive fines
imposed"). The judge deferred ruling on the excessive fines
issue pending briefing by the parties.

   On December 18, 2009, ten days after the trial, Afework
formally moved to dismiss the Judgment (the "Excessive
Fines Motion"), contending that the $79,650 forfeiture was
constitutionally excessive because that amount was dispropor-
tionate to the fine authorized under the Sentencing Guide-
lines. See United States v. Bajakajian, 524 U.S. 321, 336-37
(1998) (requiring, for purposes of an excessive fines issue,
that a proportionality analysis be conducted, assessing
whether "the amount of the forfeiture is grossly dispropor-
tional to the gravity of the defendant’s offense"). The govern-
ment responded that, in light of Afework’s (uncharged)
criminal activity and the maximum statutory fine for his
offenses of currency structuring, forfeiture of the Money was
not constitutionally excessive. More specifically, the govern-
ment maintained that the Guidelines were no longer relevant
to the Bajakajian proportionality analysis because of the
Supreme Court’s decision in United States v. Booker, 543
U.S. 220 (2005), which rendered the Guidelines advisory. As
such, the government asserted that a maximum statutory fine
of $250,000 — rather than the advisory Guidelines fine —
was the appropriate measuring stick for an excessive fines
proportionality analysis.7 The government also contended
  7
   As discussed infra, the government now argues that the maximum stat-
utory fine was miscalculated in the district court and that, pursuant to
§ 5324(d)(2) of Title 31, the maximum fine is $500,000 — which is the
"Enhanced penalty for aggravated cases." The government also asserts that
the Guidelines do not specify the fine for structuring offenses when the
maximum statutory fine is more than $250,000.
8         UNITED STATES v. $79,650.00 SEIZED FROM BANK
that, even if the magistrate judge could properly look to the
Guidelines, Afework’s relevant conduct included his earlier
structuring activities. In support of this contention, the gov-
ernment filed the affidavit of Agent Smith, who explained that
Afework had structured $86,200 of currency deposits between
October 2006 and February 2007.8

   On January 15, 2010, the magistrate judge heard argument
on the Excessive Fines Motion. Afework maintained, contrary
to the government’s assertions, that the Guidelines provided
the appropriate benchmark for establishing the forfeiture
amount and that his earlier structuring activities were not rele-
vant to the Guidelines calculation. Afework thus contended
that his offense level was only six, see USSG § 2S1.3 (2009),
yielding an advisory Guidelines fine of up to $5000, see id.
§ 5E1.2. The government’s position was vastly different —
that the applicable fine was the statutory maximum, then
thought to be $250,000, and that, in any event, the forfeiture
Judgment was not constitutionally excessive even when com-
pared to the fine authorized by the Guidelines. According to
the government, the appropriate Guidelines offense level was
either 20 or 22, each of which yields a maximum advisory
fine of $75,000.

   At the conclusion of the hearing, the magistrate judge ruled
that the advisory Guidelines fine — and not the statutory
maximum fine — provided the proper comparison for its
Eighth Amendment proportionality analysis. The judge also
found that Afework’s earlier structuring activities (between
    8
    In his affidavit, Agent Smith explained that Afework’s previous struc-
turing activities encompassed three other periods of currency deposits. In
October 2006, Afework made three currency deposits, two of $9000 and
one of $2000. Between December 2006 and January 2007, he made four
currency deposits, three of $9000 and one of $1500. Finally, in February
2007, Afework made four additional currency deposits, ranging from
$8500 to $9950. These eleven currency deposits were made at the same
banks where Afework made the April 2007 deposits underlying the forfei-
ture.
          UNITED STATES v. $79,650.00 SEIZED FROM BANK                    9
October 2006 and February 2007) constituted relevant con-
duct and that the aggregate amount of structured currency
deposits made by Afework exceeded $165,000. The judge
then determined that the Guidelines offense level was 18,
resulting in an advisory fine range of $6000 to $60,000. Predi-
cated thereon, the court fixed the forfeiture amount at
$50,000. Accordingly, the January 15, 2010 Order specified
that "the forfeiture amount is reduced to a fine of $50,000,
payable by [Afework] to the Government."9 As heretofore
explained, the government and Afework have filed separate
notices of appeal, and we possess jurisdiction pursuant to 28
U.S.C. § 1291.

                                    II.

                                    A.

   Turning to the merits, we first dispose of Afework’s sole
contention in his cross-appeal — that the government was
required but failed to prove that he had actual knowledge of
the banks’ obligation to report currency transactions in excess
of $10,000 to the government. Section 5313 of Title 31
obliges domestic financial institutions (e.g., PNC Bank and
Bank of America) to report certain transactions to the Secre-
tary of the Treasury, including currency transactions exceed-
ing $10,000. See 31 C.F.R. § 103.22(b)(1) ("Each financial
institution . . . shall file a report of each deposit . . . which
involves a transaction in currency of more than $10,000.").
Pursuant to the implementing regulations, such currency
transactions are specifically reported to the Internal Revenue
Service (the "IRS"). See id. § 103.27(a)(4). Afework asserts
that, although he knew that these banks were obligated to
report currency transactions in excess of $10,000, he believed
  9
    Although the Order refers to a fine of $50,000 — rather than the forfei-
ture of that sum — a civil forfeiture is considered to be a punishment and,
thus, constitutes a fine for purposes of an Eighth Amendment proportion-
ality analysis. See United States v. Austin, 509 U.S. 602, 622 (1993).
10        UNITED STATES v. $79,650.00 SEIZED FROM BANK
that the reporting requirement stemmed from internal bank
rules unique to PNC Bank and Bank of America. According
to Afework, he did not know that the banks were obliged to
report such transactions to the government — and the govern-
ment failed to present sufficient evidence to prove otherwise.10
Afework contends that, as a result, there was insufficient
proof that he contravened 31 U.S.C. § 5324.

   In assessing such a sufficiency challenge, we view the evi-
dence in the light most favorable to the prosecution and deter-
mine whether "substantial evidence" supports the judgment.
See United States v. Jeffers, 570 F.3d 557, 565 (4th Cir.
2009); see also United States v. Whorley, 550 F.3d 326, 338
(4th Cir. 2008) (defining "substantial evidence" as "evidence
that a reasonable finder of fact could accept as adequate and
sufficient"). At trial, the magistrate judge was presented with
testimony from both Agent Smith and Afework concerning
Afework’s knowledge that the banks were obligated to file the
currency reporting forms pursuant to a banking regulation —
a regulation which, contrary to some of Afework’s assertions,
was a government regulation and not unique to each bank. In
making his factual findings the judge was entitled to make
appropriate credibility determinations and to draw reasonable
inferences from the trial testimony. Viewed in context, the
totality of the evidence — and in particular the compelling
evidence of prior structuring activities — was more than suf-
   10
      Afework’s opening appellate brief asserted that the United States was
required to prove his knowledge that the currency reporting forms were to
be filed "with the IRS." That position was refined in his reply brief, how-
ever, where Afework recognized that the United States only had to prove
knowledge that the reporting forms were to be filed "with the govern-
ment." Two potentially fatal hurdles arise therefrom — first, that his
appellate contention was waived by not being properly presented in the
opening brief, and, second, that Afework had admitted (in his opening
brief) that there was sufficient proof of his knowledge that the reporting
forms had to be filed with the government. We will proceed beyond those
hurdles, however, and nevertheless assess the merits of Afework’s suffi-
ciency challenge as most recently refined.
        UNITED STATES v. $79,650.00 SEIZED FROM BANK         11
ficient to justify the court’s findings in support of the § 5324
offenses. We therefore reject Afework’s cross-appeal and
affirm the Judgment’s determination, by a preponderance of
the evidence, that he committed the offenses of currency
structuring.

                              B.

   We turn finally to the government’s appeal, by which it
challenges the magistrate judge’s Order reducing the forfei-
ture amount on Eighth Amendment grounds from $79,650 to
$50,000. We review de novo whether a forfeiture of property
contravenes the Excessive Fines Clause of the Eighth Amend-
ment. See United States v. Jalaram, 599 F.3d 347, 351 (4th
Cir. 2010). Significantly, the government contends that the
judge erred in relying on the Guidelines for its Eighth Amend-
ment proportionality analysis, because the fine table in Guide-
lines section 5E1.2 is simply inapplicable where — as here —
the statutory maximum fine exceeds $250,000. See USSG
§ 5E1.2(c)(4) (2009) (explaining that fine table does not apply
"if defendant is convicted under a statute authorizing . . . a
maximum fine greater than $250,000").

   Under § 3571(b)(3) of Title 18, "an individual who has
been found guilty of an offense may be fined . . . for a felony,
not more than $250,000." Pursuant to 31 U.S.C. § 5324(d)(2),
however, the $250,000 maximum fine must be doubled under
the aggravated facts of this case because

    [w]hoever violates [§ 5324] as part of a pattern of
    any illegal activity involving more than $100,000 in
    a 12-month period shall be fined twice the amount
    provided in subsection (b)(3) . . . of section 3571.

As found by the magistrate judge in connection with the
Order, Afework structured more than $100,000 (i.e., at least
$165,000) in a twelve-month period (i.e., the seven-month
period between October 2006 and April 2007). Accordingly,
12      UNITED STATES v. $79,650.00 SEIZED FROM BANK
this is an aggravated case under § 5324(d)(2), the statutory
maximum fine was $500,000, and the fine table in section
5E1.2 of the Guidelines is inapplicable. The parties, however,
did not recognize this legal point in the underlying proceed-
ings and thus failed to alert the magistrate judge to his misap-
prehension of the applicable law.

   As the Supreme Court explained in Bajakajian, a forfeiture
of property will violate the Excessive Fines Clause only if it
is "grossly disproportional" to the gravity of the offense. See
524 U.S. 321, 336 (1998); see also United States v. Ahmad,
213 F.3d 805, 815 (4th Cir. 2000) (recognizing that Bajaka-
jian applies when determining "whether any punitive forfei-
ture — civil or criminal — is excessive"). A proper
assessment of whether a specific forfeiture contravenes the
Excessive Fines Clause typically requires an analysis of sev-
eral factors. See Jalaram, 599 F.3d at 355-56. This appeal,
however, turns on only one of those factors: "the amount of
the forfeiture and its relationship to the authorized penalty."
Id. at 355. As the government maintains, a legal error was
made when the court predicated its proportionality analysis on
an incorrect understanding that the authorized penalty was the
Guidelines advisory fine of $60,000. Under the facts of this
aggravated case, the correct authorized penalty is the statutory
maximum fine of $500,000. As such, we are constrained to
agree with the government that the magistrate judge’s propor-
tionality analysis was erroneously conducted. We therefore
vacate the Order and remand for further proceedings.

                              III.

  Pursuant to the foregoing, we reject Afework’s cross-
appeal and affirm the Judgment of December 8, 2009. On the
other hand, we vacate the Order of January 15, 2010, and
remand for such other and further proceedings as may be
appropriate.

                 No. 10-1291 VACATED AND REMANDED
                                No. 10-1294 AFFIRMED