United States v. Sperrazza

• Decision Date: 17 August 2015
• Docket Number: No. 14–11972.,14–11972.
• Citation: 804 F.3d 1113
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Robert B. SPERRAZZA, Defendant–Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

804 F.3d 1113

UNITED STATES of America, Plaintiff–Appellee

v.Robert B. SPERRAZZA, Defendant–Appellant.

No. 14–11972.

United States Court of Appeals, Eleventh Circuit.

Aug. 17, 2015.

Frank Phillip Cihlar, Gregory Victor Davis, Karen M. Quesnel, U.S. Department of Justice, Washington, DC, Michelle Lee Schieber, Danial Edward Bennett, Michael J. Moore, U.S. Attorney, U.S. Attorney's Office, Macon, GA, James N. Crane, U.S. Attorney's Office, Albany, GA, for Plaintiff–Appellee.

William Rakestraw Cowden, William Cowden, LLC, Washington, DC, for Defendant–Appellant.

Appeal from the United States District Court for the Middle District of Georgia.

Before MARCUS, ROSENBAUM, and GINSBURG,^* Circuit Judges.

Opinion

GINSBURG, Circuit Judge:

Dr. Robert Sperrazza was convicted of three counts of tax evasion, in violation of 26 U.S.C. § 7201 and two counts of structuring a currency transaction, in violation of 31 U.S.C. § 5324(a)(3). The district court sentenced him to 36 months imprisonment and ordered him to forfeit $870,238.99. Sperrazza argues the conviction must be set aside because the structuring counts of the indictment are defective and, if the conviction is not set aside, the order of forfeiture must be vacated because it violates the Excessive Fines Clause of the Eighth Amendment to the Constitution of the United States. We disagree with both arguments and affirm the conviction and the order of forfeiture.

I. Background

Pursuant to 31 U.S.C. § 5313(a), a “domestic financial institution” is required to file a report with the Secretary of the Treasury whenever it “is involved in a transaction for the payment, receipt, or transfer of United States coins or currency ... in an amount” greater than $10,000. See 31 C.F.R. § 1010.311. The “currency transaction reports” generated by financial institutions are used by law enforcement to detect criminal activity. See United States v. Lang, 732 F.3d 1246, 1247 (11th Cir.2013). Because, however, the reporting obligation is borne by the financial institution and not by its customer “the reporting requirement could be evaded through the simple expedient of dividing large cash transactions into amounts small enough not to trigger it.” Id. “To prevent that and similar end runs,” id., the law prohibits a person from “structuring” a transaction with a financial institution “for the purpose of evading the reporting requirements,” 31 U.S.C. § 5324(a).

Sperrazza and two other doctors had an anesthesiology practice in Albany, Georgia. The practice outsourced its billing operations to Physicians Professional Management (PPM), which collects and processes payments from patients and insurance companies. PPM ordinarily deposits the checks it receives from patients, but Sperrazza instructed PPM to mail to him each week any checks received from his patients. The bundle of checks Sperrazza received each week from PPM usually totaled several thousand dollars and on at least one occasion the checks totaled more than $10,000.

Approximately every ten days Sperrazza cashed the checks he received from PPM at a bank in Albany. Although Sperrazza and his practice had several accounts with the bank, he always cashed the checks rather than depositing them into an account. Ordinarily he cashed between 20 and 50 checks per visit; the checks often totaled more than $9,000 but never exceeded $10,000. In 2008, for example, Sperrazza cashed checks on 36 days, on 24 of which the checks totaled between $9,000 and $10,000. According to one of his partners, Sperrazza had told him he never cashed checks totaling more than $10,000 at one time because he wanted “to avoid any reports or anything that would involve ... the regulatory or IRS authorities.”

Sometimes Sperrazza also deposited cash into one of his accounts at the bank before he cashed the checks he had received from PPM. The cash deposits, like the checks, often totaled more than $9,000 without ever exceeding $10,000. In 2008, Sperrazza deposited cash on 18 days, on 14 of which he deposited between $9,000 and $10,000.

In December 2008 law enforcement officials searched Sperrazza's home in connection with an unrelated criminal investigation. The officers discovered there approximately $24,000 in cash, some of which was in an envelope labeled “clean.” Sperrazza's accountant subsequently informed the IRS that Sperrazza had underreported his income by failing to disclose payments he had received from his patients. Sperrazza later filed amended tax returns and paid the tax owed for 2005, 2006, and 2007.

In 2012 a grand jury returned a five-count indictment against Sperrazza. The first three counts allege he evaded income tax in 2005, 2006, and 2007, respectively; the fourth and fifth counts allege he structured a currency transaction in 2007 and in 2008, respectively, in amounts totaling $870,238.99. The Government also notified Sperrazza it would seek an order requiring him to forfeit that amount.

In 2013 a jury found Sperrazza guilty of all five counts. In 2014 Sperrazza filed a motion to set aside the jury's verdict, in which he argued for the first time the indictment is defective. The district court denied the motion as untimely. It then sentenced Sperrazza to concurrent terms of 36 months imprisonment for each count and ordered him to forfeit the $870,238.99 sought by the Government.

II. Analysis

On appeal Sperrazza renews his arguments that the indictment is defective and the order of forfeiture is excessive.

A. Indictment

Sperrazza first contends we must set aside his conviction because counts four and five of the indictment, which charge him with structuring a currency transaction in 2007 and in 2008 respectively, fail to state an offense and are factually inaccurate. Before turning to the merits of Sperrazza's two claims, we must decide whether they are subject to appellate review and, if so, under what standard of review.

1. Standard of review

Sperrazza first asserted the indictment is defective in a motion he filed ten months after his trial and conviction. The scope of our review is governed by Federal Rule of Criminal Procedure 12, which identifies the motions a defendant must file before trial and the consequences of filing an untimely motion. A revised version of Rule 12 took effect after Sperrazza filed his appeal but before we heard argument.

The old version of Rule 12(b), which was in effect prior to December 1, 2014, distinguished two types of claims that an indictment is defective.¹ The first type—claims the indictment “fails to invoke the court's jurisdiction or to state an offense”—could be raised at “any time while the case is pending.” Id. 12(b)(3)(B). In a case to which the old rule applies, therefore, we are obligated to consider an argument the indictment fails to state an offense even if the defendant raises the argument for the first time on direct appeal. See United States v. Izurieta, 710 F.3d 1176, 1179 (11th Cir.2013) (holding the old version Rule 12(b)(3)(B) requires us to “raise sua sponte the jurisdictional issue of whether the indictment sufficiently alleges an offense in violation of the laws of the United States provided the mandate has not issued on direct appeal”).

The second type of claim created by the old version of Rule 12 is that the indictment is defective for any reason other than those of the first type. Type two claims had to be raised by the pre-trial deadline set by the district court and, pursuant to Rule 12(e), a defendant “waives” any type two claim not raised by that deadline. See United States v. Pacchioli, 718 F.3d 1294, 1307 (11th Cir.2013) (“[A] defendant must object before trial to defects in the indictment, such as a lack of factual specificity, and the failure to do so waives appellate review”). An argument that has been waived may not be reviewed on appeal. See United States v. Lewis, 492 F.3d 1219, 1222 (11th Cir.2007) (en banc). If the old version of Rule 12 applies to this case, then under Rule 12(e) we are barred from reviewing Sperrazza's claim the indictment is factually inaccurate unless there is “good cause ... [to] grant relief from the waiver.”

Under the new version of Rule 12(b)(3), which took effect December 1, 2014, all claims that an indictment is defective “must be raised by pretrial motion if the basis for the motion is then reasonably available and the motion can be determined without a trial on the merits.”² The Advisory Committee Notes accompanying the new rule explains it was “amended to remove language that allowed the court at any time while the case is pending to hear a claim that the ‘indictment or information fails ... to state an offense,’ ” which “was previously considered fatal whenever raised and was excluded from the general requirement that charging deficiencies be raised prior to trial.”

If applicable to Sperrazza's appeal, the new rule renders untimely his motion arguing the indictment fails to state an offense—unless, that is, the “basis for the motion” was not “reasonably available” before trial or it could not have been “determined without a trial on the merits.” Rule 12(b)(3) (2015). If the motion was untimely, then the argument is forfeit, and we must review its denial by the district court only for plain error, not de novo. See Fed.R.Crim.P. 52(b) ; United States v. Olano, 507 U.S. 725, 731, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993) (holding the plain-error standard applies to “errors that were forfeited because not timely raised in district court”).

Although the amendment to Rule 12 is detrimental to Sperrazza's cause in one respect, it works to his advantage in another. Under the old version of the rule, Sperrazza waived his claim the indictment is factually inaccurate because he did not raise it before trial, and the argument is not subject to appellate review unless Sperrazza shows there is “good cause” for relief from the waiver. Rule 12(e) (2013); see Pacchioli, 718 F.3d at 1307. The new version of Rule 12, however, makes no mention of “waiver.” The committee's notes explain the...