Court Opinion

ID: 9465708
Source: CourtListenerOpinion
Date Created: 2023-08-05 00:53:29.095812+00
Date Added: 2024-06-11T17:39:19.463873
License: Public Domain

BRIGHT, Circuit Judge,
concurring in part, dissenting in part.
While I concur in the affirmance of the misdemeanor convictions of the defendants, Willi Beusch and Deak & Company of California (Deak), I would reject the Government’s appeal. The Government, unsatisfied with obtaining 377 misdemeanor convictions against defendants, requests reinstatement of a four-count felony indictment dismissed by the district court.
The felony charges arose out of the same conduct as the misdemeanor charges — the willful failure of Deak and Beusch, on 377 occasions, to report their receipt of currency exceeding $5,000 from outside the United States. Such conduct violates the foreign financial transaction reporting requirements of section 231 of the Bank Secrecy Act of 1970 (the Act) and clearly amounts to misdemeanor offenses under 31 U.S.C. § 1058 (1976).1 The Government contends that these reporting violations, which involved transactions totaling more than $100,000 in each of four twelve-month periods, may be aggregated to form four felony violations “committed as part of a pattern *880of illegal activity involving transactions exceeding $100,000 in a twelve-month period.” 31 U.S.C. § 1059(2) (1976) (emphasis added).
A reading of the statute in light of the statutory history convinces me, contrary to the majority view, that several reporting violations constitute several misdemeanors and nothing more when, as in this case, the violations are unrelated to any other type of activity that might be considered illegal.
The felony statute which the Government seeks to apply here reads:
§ 1059. Additional criminal penalty in certain cases
Whoever willfully violates any provision of this chapter where the violation is—
(1) committed in furtherance of the commission of any other violation of Federal law, or
(2) committed as part of a pattern of illegal activity involving transactions exceeding $100,000 in any twelvemonth period,
shall be fined not more than $500,000 or imprisoned not more than five years, or both.
According to the Government’s theory, repeated violations of a “provision of this chapter,” standing alone, may amount to “a pattern of illegal activity” under subdivision (2).
In my view, however, subdivision (2) should be read as parallel in construction to subdivision (1), which calls for felony penalties where reporting violations are committed “in furtherance of the commission of any other violation of Federal law” (emphasis added). An ordinary reading of subdivision (2) demonstrates an intention to impose felony sanctions where the reporting violations serve “as part of a pattern of illegal activity.” The other “parts” of such a pattern of illegal activity might include, for example, violations of state law, local ordinances, or state regulations. In any event, it appears that, just as subdivision (1) requires a connection between the reporting violation and some “other violation of Federal law,” subdivision (2) applies only where a reporting violation is tied to other activity which is independently “illegal.”
Such a reading of subdivision (2) is consistent with the legislative history. Congress enacted the foreign financial transaction reporting requirements of the Act in response to considerable testimony that
[sjecret foreign bank accounts and secret foreign financial institutions have permitted proliferation of “white collar” crime; have served as the financial underpinning of organized criminal operations in the United States; have been utilized by Americans to evade income taxes, conceal assets illegally and purchase gold; have allowed Americans and others to avoid the law and regulations governing securities and exchanges; have served as essential ingredients in frauds including schemes to defraud the United States; have served as the ultimate depository of black market proceeds from Vietnam; have served as a source of questionable financing for conglomerate and other corporate stock acquisitions, mergers and takeovers; have covered conspiracies to steal from U.S. defense and foreign aid funds; and have served as the cleansing agent for “hot” or illegally obtained monies. [H.R.Rep.No.91-975, 91st Cong., 2d Sess., at-, 1970 U.S.Code Cong. & Admin.News, pp. 4394, 4397.]
Although all imports and exports of large sums of money must be reported under the Act, information concerning legitimate banking transactions — i. e., those unrelated to illegal activities — does not represent the congressional goal. Rather, the express purpose of the Act is
to require certain reports or records where such reports or records have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings. [31 U.S.C. § 1051 (1976).]
See California Bankers Assn. v. Schultz, 416 U.S. 21, 26-28, 35, 94 S.Ct. 1494, 39 L.Ed.2d 812 (1974).
As the majority observes, Congress intended the felony provisions of 31 U.S.C. § 1059 to impose a severe penalty upon “serious violations” in order to deter potential violators. That expression of intent, however, does not justify the conclusion that, for deterrence purposes, the failure to *881report otherwise lawful transactions, conduct ordinarily treated as a minor misdemeanor violation, should be converted into a felony because of repetition.2
Congress enacted a wide range of penalties, apart from the felony statute, for violations of the Act’s reporting provisions. For any violation the Secretary of the Treasury may assess a civil penalty in an amount not exceeding the value of the transported money instruments for which a report was required. 31 U.S.C. § 1103.3 Willful violators are subject to an additional civil penalty of up to $1,000 per violation, 31 U.S.C. § 1056, or to criminal prosecution and punishment by a fine not exceeding $1,000 or imprisonment not longer than one year for each offense, 31 U.S.C. § 1058. Thus, no need exists in the statutory scheme to extend the reach of the felony provisions to encompass a series of acts, each expressly defined as a misdemeanor.
For the 377 violations charged as misdemeanors, each defendant faced an aggregate fine of $377,000, and Beusch faced a possible sentence of 377 years’ imprisonment — a substantial deterrent without resorting to the strained reading of the statute sought by the Government.4
As the majority notes, this is the Government’s “maiden attempt” to apply 31 U.S.C. § 1059. Such a criminal statute of uncertain scope calls for a strict construction and leniency in application.
It has long been settled that “penal statutes are to be construed strictly,” Federal Communications Comm’n v. American Broadcasting Co., 347 U.S. 284, 296, [74 S.Ct. 593, 98 L.Ed. 699] and that one “is not to be subjected to a penalty unless the words of the statute plainly impose it,” Keppel v. Tiffin Savings Bank, 197 U.S. 356, 362 [25 S.Ct. 443, 49 L.Ed. 790]. “[W]hen choice has to be made between two readings of what conduct Congress has made a crime, it is appropriate, before we choose the harsher alternative, to require that Congress should have spoken in language that is clear and definite.” United States v. Universal C. I. T. Credit Corp., 344 U.S. 218, 221-222 [73 S.Ct. 227, 229, 97 L.Ed. 260], [United States v. Campos-Serrano, 404 U.S. 293, 297, 92 S.Ct. 471, 474, 30 L.Ed.2d 457 (1971).]
See United States v. Bass, 404 U.S. 336, 347-48, 92 S.Ct. 515, 30 L.Ed.2d 488 (1971); Rewis v. United States, 401 U.S. 808, 812, 91 S.Ct. 1056, 28 L.Ed.2d 493 (1971); Bell v. United States, 349 U.S. 81, 83, 75 S.Ct. 620, 99 L.Ed. 905 (1955).
For the foregoing reasons, I dissent from the majority’s expansive reading of the pertinent felony provision, 31 U.S.C. § 1059(2).

. Section 231 of the Act, 31 U.S.C. § 1101, requires anyone connected with the transportation into or out of the United States of “monetary instruments” (including currency) exceeding $5,000 on any one occasion to report such transaction to the Secretary of the Treasury, in a manner prescribed by the Secretary’s regulations. Under 31 U.S.C. § 1058, willful violations of the reporting requirements of section 231 are misdemeanors, punishable by a fine not exceeding $1,000 or imprisonment not longer than one year for each offense.

. The isolated statement from the legislative history relied upon by the majority, see pp. 878-879 supra, is at least equally consistent with the view that, by “serious violations,” Congress meant violations connected with other federal crimes or with some other activity which is illegal apart from the reporting violation and which may be motivated by the extraordinary profits derived from such illegal activity.

. In addition, 31 U.S.C. § 1102 provides that any monetary instruments in the process of transportation, with respect to which a report required by § 231 of the Act has not been filed or contains material omissions, is subject to seizure and forfeiture to the United States.

. The district court apparently considered a modest fine a sufficient deterrent in this case, as it fined Beusch and Deak $5,000 and $20,-000, respectively, for the 377 misdemeanor violations.