U.S. v. Beusch

• Decision Date: 10 May 1979
• Docket Number: Nos. 78-1904,78-2173 and 78-1577,s. 78-1904
• Citation: 596 F.2d 871
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Willi BEUSCH and Deak & Company of California, Inc., Defendants-Appellants. UNITED STATES of America, Plaintiff-Appellant, v. Willi BEUSCH and Deak & Company of California, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 871

596 F.2d 871

UNITED STATES of America, Plaintiff-Appellee, v. Willi BEUSCH and Deak & Company of California, Inc.,

Defendants-Appellants.

UNITED STATES of America, Plaintiff-Appellant, v. Willi BEUSCH and Deak & Company of California, Inc.,

Defendants-Appellees.

Nos. 78-1904, 78-2173 and 78-1577.

United States Court of Appeals, Ninth Circuit.

May 10, 1979.

Wm. A. Brockett, San Francisco, Cal., for defendants.

Edward P. Davis, Jr., Asst. U. S. Atty., San Francisco, Cal., for U. S.

Appeal from the United States District Court for the Northern District of California.

Before CARTER, BRIGHT ^* and CHOY, Circuit Judges.

JAMES M. CARTER, Circuit Judge:

Deak & Company of California (Deak), headquartered in San Francisco, is a wholly-owned subsidiary of Deak and Co. of New York, the largest foreign currency exchange dealer in the world. Beusch was Vice-President and the senior corporate officer of Deak located in San Francisco. Deak was convicted of 377 misdemeanor violations of the Bank Secrecy Act, 31 U.S.C. §§ 1058 and 1101 ¹ failure to report receipt of currency in an amount exceeding $5,000 from outside the United States. Beusch, as responsible corporate officer in the offending transactions, was likewise convicted of the 377 misdemeanors. Both appeal from those convictions, citing to insufficiencies in the search warrant affidavit and excesses in the search which uncovered most of the incriminating evidence. Deak adds to these alleged errors the claim that the evidence was insufficient to sustain a finding of willful violation of § 1101, and the claim that one of the jury instructions given constituted reversible error.

The United States Government also appeals from the dismissal of a four-count felony indictment against Deak and Beusch which charged that the same set of facts alleged in the indictment for the misdemeanors referred to above constituted a pattern of illegal transactions in violation of 31 U.S.C. § 1059. ²

For reasons discussed more fully below, we affirm the convictions of Deak and Beusch, and we reverse the dismissal of the felony indictment.

The facts show that in 1972, Beusch initiated contact between Deak and two Filipinos Gimenez and Lai Man who began sending large amounts of currency to the United States for further disbursal throughout the world. Between 1972 and 1976, approximately $11 million were sent and disbursed. None of the money shipments was reported to the Treasury Department as required by certain provisions of the Bank Secrecy Act, 31 U.S.C. § 1101.

Sometime in the Spring of 1976, customs agents in Hawaii inadvertently discovered currency in a package sent from the Phillippines to Deak's offices in San Francisco. Suspicions were aroused when customs, postal, and courier records revealed that in the recent past, many similar packages had been sent from the same source to the same address, but Treasury records showed no § 1101 reports. A search warrant was issued and executed in May, 1976, at Deak's offices in San Francisco. Incriminating ledgers, files and packages of money were discovered there. Convictions and these appeals followed.

I. ISSUES RAISED

A. Did the affidavit in support of the government's application for a warrant to search Deak's San Francisco office show probable cause to believe evidence of violation of the Bank Secrecy Act would be found there?

B. Was the search of Deak's office impermissibly broad, thus requiring suppression of some of the evidence seized?

C. Was the evidence sufficient to sustain a finding that Deak willfully violated the Bank Secrecy Act through the acts of its agent Beusch?

D. Was it reversible error to instruct the jury that a corporation may be liable for the acts of its agents done within the scope of their authority, even though such acts are contrary to either actual instructions or stated corporate policy?

E. Was the district court correct in dismissing the felony indictment on the ground that misdemeanor violations under 31 U.S.C. § 1058 could not be lumped together and constitute felony violations under 31 U.S.C. § 1059?

II. DISCUSSION

A. Sufficiency of the Affidavit

Deak and Beusch argue initially that the affidavit submitted by the Customs agents who sought the warrant to search Deak's offices was insufficient because it did not reveal enough to allow the issuing magistrate to assess the reliability of the information contained therein. It is apparent from the affidavit that most of the information in it is hearsay; that is, it came from an informant, not from the agents who submitted it. Rule 41, F.R.Crim.P., allows such hearsay to form the basis of probable cause to justify the issuance of the warrant, but it has been judicially determined that there must be "substantial basis for crediting the hearsay." Jones v. United States, 362 U.S. 257, 80 S.Ct. 725, 4 L.Ed.2d 697 (1960). More recently, Aguilar v. Texas, 378 U.S. 108, 84 S.Ct. 1509, 12 L.Ed.2d 723 (1964) announced the famous two-pronged test of sufficiency of affidavits based on hearsay. Accord, Spinelli v. United States, 393 U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637 (1969); Rutherford v. Cupp, 508 F.2d 122 (9th Cir. 1974), Cert. denied, 421 U.S. 933, 95 S.Ct. 1663, 44 L.Ed.2d 92 (1975). See United States v. McCrea, 583 F.2d 1083 (9th Cir. 1978). The test is as follows: First, the affidavit must show some underlying circumstances as to why the informant believed his information was reliable. Second, the affidavit must show some underlying circumstances that would allow the affiant to conclude that the informant was credible. The purpose of these tests is, of course, to provide enough information to a neutral and detached magistrate to allow him to determine for himself whether probable cause to search exists. Aguilar, supra. Unless these tests are met, an affidavit based on hearsay is inadequate to show such probable cause. Id.

All parties concede that the second prong credibility of the informant is met in this case. The informant here, one Foster, was identified as a special agent for the U.S. Customs Service, and government investigatory agents are entitled to the presumption of credibility in such circumstances. See United States v. Ventresca, 380 U.S. 102, 85 S.Ct. 741, 13 L.Ed.2d 684 (1965); United States v. Steed, 465 F.2d 1310 (9th Cir.), Cert. denied,409 U.S. 1078, 93 S.Ct. 697, 34 L.Ed.2d 667 (1972).

Deak and Beusch contend, however, that because the affidavit does not explain precisely how agent Foster obtained The affidavit here states that the source of agent Foster's information was "certain documents", without directly identifying what those documents were. Deak and Beusch maintain that failure to identify the documents any further is the same as failing to flesh out the reliability of an informant, a defect condemned in Spinelli, supra. Indeed, this argument has superficial appeal. Closer scrutiny shows, however, that the two cases are dissimilar in significant ways. In Spinelli, the defective affidavit stated only that "the FBI 'has been informed by a confidential reliable informant that William Spinelli is operating a handbook and accepting wagers and disseminating wagering information (by means of certain telephones).' " 393 U.S. at 414, 89 S.Ct. at 588. This bare bones assertion was not substantiated in any acceptable way in the affidavit, which was found to be inadequate. In the present case, on the other hand, the source of the information is identified as "certain documents", and the contents of those documents are summarized in considerable detail. The abundant detail might, by itself, be enough to make this affidavit inherently reliable. See United States v. Toral, 536 F.2d 893 (9th Cir. 1976); United States v. Hamilton, 490 F.2d 598 (9th Cir.), Cert. denied, 419 U.S. 880, 95 S.Ct. 145, 42 L.Ed.2d 120 (1974). But other facts make it unnecessary for us to rely solely on the detail evident in the affidavit to uphold its validity.

his information or why he believed it was true, there is no basis for the magistrate's or the district court's conclusion that the information was reliable. Thus, they argue, the affidavit fails to satisfy the first prong of Aguilar.

Other information contained in the affidavit corroborates the information gleaned from those "certain documents", and, in contrast to Spinelli, ³ the other information engenders suspicion. It shows that the description of the money package opened inadvertently in Hawaii matched the descriptions found in those "certain documents" of other packages sent from the Phillippines to Deak offices in San Francisco and Los Angeles. It also shows that no § 1101 reports were filed for money shipments even though Deak employees said they had been. We believe that where allegations, the reliability of which arguably does not satisfy the first prong of Aguilar, are corroborated by other information which engenders suspicion, the reliability of such allegations in enhanced. We also hold that on these facts, the information in those "other documents" was thereby shown to be reliable enough to justify a finding of probable cause.

There is a third reason for our conclusion. We have examined the affidavit in question and are persuaded that it shows the "certain documents" to have been postal and customs records. Had the affidavit said as much, there is no question but that the requirements of Aguilar and Spinelli would have been satisfied. The fact that this was not stated explicitly does not, however, preclude the magistrate or the district court or us from inferring as much. While it would have been better for the affiant to include that item of information in the affidavit, this oversight was, at worst, harmless error. Where, as here, the detail and character of the information is such that it allows the magistrate to reasonably infer the identity of its source, the mere failure to identify that source explicitly will not cause the affidavit to become fatally impaled on the first...