US v. Reguer, CR-88-155-02 (CPS).

• Decision Date: 09 January 1995
• Docket Number: No. CR-88-155-02 (CPS).,CR-88-155-02 (CPS).
• Parties: UNITED STATES of America v. Gabriel REGUER, Defendant.
• Court: U.S. District Court — Eastern District of New York

901 F. Supp. 515

UNITED STATES of America v. Gabriel REGUER, Defendant.

No. CR-88-155-02 (CPS).

United States District Court, E.D. New York.

January 9, 1995.

Stuart J. Grossman, Grossman, Lavine & Rinaldo, Forest Hills, NY, for Gabriel Reguer.

Kelly A. Moore, U.S. Atty's Office, Crim. Div., Brooklyn, NY, for U.S.

MEMORANDUM AND ORDER

SIFTON, Chief Judge.

Gabriel Reguer ("Reguer"), after pleading guilty to a charge of causing his bank to fail to file currency transaction reports in violation of 31 U.S.C. §§ 5313 and 5322(a), now moves, pro se, to expunge his conviction and recover amounts paid for fines and restitution in light of the Supreme Court's decision in Ratzlaf v. United States, ___ U.S. ___, 114 S.Ct. 655, 126 L.Ed.2d 615 (1994). The government opposes Reguer's motion, contending that Ratzlaf does not apply to Reguer's conviction and that, even if it did, Reguer would only be entitled to a trial on the underlying information. For the reasons discussed below, Reguer's application is granted. His plea and conviction are vacated, and the parties are directed to appear on January 31, 1995, at 4:30 p.m. to set a date for trial.

BACKGROUND

The following facts are drawn from a stipulation signed at the time of sentencing by Reguer and the government setting forth facts to be considered by the Court in sentencing Reguer. In 1986 Reguer sold a counterfeit version of a rare Passover Haggadah to an unsuspecting buyer. The Haggadah recounts the story of the exodus of the Jews from Egypt and is used during the Passover services. Reguer received $59,800 in cash for the Haggadah.

Reguer then went to a bank to deposit the money and was informed that a single deposit of that size would be reported to the federal government. Reguer then "structured" his deposits into smaller amounts so that no individual deposit would trigger the reporting requirements. Reguer contends that he was concerned that a report of the deposits would lead the government to believe that he was a drug dealer. Subsequently, Reguer made two unsuccessful attempts to sell a counterfeit Haggadah to other buyers.

In 1988 a grand jury indicted Reguer and his brother-in-law for mail fraud. After a jury was selected and the government had made its opening statement, Reguer decided to plead guilty to an information charging him with violating 31 U.S.C. §§ 5313, 5322(a) and 18 U.S.C. § 2 by causing The First National Savings Bank to fail to file a currency transaction report. Reguer maintained, however, that he was merely acting for his brother-in-law and did not know that he was dealing in counterfeits. In addition, Reguer admitted that he "structured" his transaction to avoid the reporting requirements, but contended that he was never aware that it was a crime to do so. Reguer was sentenced to three years of probation and a fine of $150,000. Reguer was also ordered to pay restitution to the victims, but that aspect of the sentence was vacated upon consent of the government because Reguer's offense did not cause direct loss to the victims.

Reguer subsequently sent a letter to the Court seeking to expunge his conviction and recover amounts paid in restitution and towards the fine. Reguer contends that his conviction must be overturned in light of the Supreme Court's holding in Ratzlaf v. United States that a defendant is not guilty of structuring under 31 U.S.C. § 5324(3)¹ unless he knew that his actions were illegal. Reguer continues to maintain, as he did at sentencing, that, although he structured his deposits to avoid the reporting requirements, he did not know that he was committing a crime.

Upon receipt of Reguer's letter, the Court directed the government to show cause why the relief requested should not be granted. The government contends that the Ratzlaf decision does not apply to Reguer because he was not convicted under 31 U.S.C. § 5324(3) but under 31 U.S.C. § 5313. The government argues that a defendant need only be shown to have been aware of and intended to avoid the reporting requirement in order to prove a willful violation of section 5313. The government asserts that Reguer's conviction may be distinguished from that of the petitioner in Ratzlaf because the conduct prohibited by section 5324(3), the section at issue in Ratzlaf, is the structuring of transactions and not, as under § 5313, causing a bank to fail to file the required reports. Finally, the government contends that, even if the Ratzlaf decision adds the element of knowledge to the crime to which Reguer pleaded guilty, Reguer's relief would be limited to allowing him to withdraw his guilty plea and proceed to trial on the underlying information. The government states that Reguer would then be entitled to a jury instruction that the government had to prove that Reguer knew that the structuring of his transactions was illegal.

DISCUSSION

As an initial matter, since Reguer was never sentenced to a term of imprisonment and has completed his term of probation, his letter to the Court cannot be construed as a petition for habeas corpus. He still may seek relief, however, if, following the generous pleading standards to be afforded to pro se litigants set forth in Haines v. Kerner, 404 U.S. 519, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972), the letter is considered as a petitioner for a writ of error coram nobis. In United States v. Morgan, 346 U.S. 502, 511, 74 S.Ct. 247, 252, 98 L.Ed. 248 (1954), the Supreme Court made clear that a federal district court is empowered to issue a writ of coram nobis, pursuant to the All-Writs Act, 28 U.S.C. § 1651(a), "under circumstances compelling such action to achieve justice." The Court recognized that at times there is a need for this writ because "the results of the conviction may persist," even when a sentence has been completely served. Morgan, 346 U.S. at 512, 74 S.Ct. at 253. The writ "is used to attack allegedly invalid convictions which have continuing consequences." United States v. Stoneman, 870 F.2d 102, 105-106 (3d Cir.1989). According to the government, as of November 1993 Reguer still owed over $200,000 in fines and interest. Reuger's continuing obligation to pay the fines imposed on him satisfies the continuing consequences requirement of the writ.

Despite the government's argument to the contrary, Ratzlaf has indeed added an element of knowledge to the crime to which Reguer pleaded guilty. In Ratzlaf, the Supreme Court held that by virtue of 31 U.S.C. § 5322(a), the enforcement provision of the Currency and Foreign Transactions Reporting Act, a violation of the antistructuring provision of the Money Laundering Control Act of 1986, 31 U.S.C. § 5324(3), occurs only when a defendant has "willfully violated" that section. Section 5322(a) provides:

A person willfully violating this subchapter 31 U.S.C. §§ 5311 et seq. or a regulation prescribed under this subchapter (except section 5315 of this title or a regulation prescribed under section 5315) shall be fined not more than $250,000 or imprisoned for not more than five years or both.

The Court held that the willfulness requirement of section 5322(a) requires that the government show an intent to do the illegal act with the knowledge that the act itself was illegal. Thus the Court held that the petitioner in Ratzlaf could not have been found guilty of the structuring crime with which he was charged without a showing that he not only knew that he was evading the reporting requirements but that he knew it was a crime to do so.

In reaching its decision, the Court relied upon the fact that various Courts of Appeals had construed the willfulness requirement of section 5322(a) to mean that the defendant had to have both knowledge of the reporting requirement and a specific intent to commit the crime, i.e., "a purpose to disobey the law." Ratzlaf, ___ U.S. at ___, 114 S.Ct. at 659. In particular, the Court cited approvingly United States v. Eisenstein, in which the Eleventh Circuit held that a willful violation of § 5313's reporting requirement for cash transactions requires "`proof of the defendant's knowledge of the reporting requirement and his specific intent to commit the crime,'" 731 F.2d 1540, 1543 (11th Cir.1984) (quoting United States v. Granda, 565 F.2d 922, 926 (5th Cir.1978)), and United States v. Dichne, 612 F.2d 632, 636 (2d Cir.1979), in which the Second Circuit held that a violation of currency reporting requirements of 31 U.S.C. § 5316 (concerning transporting money into or out of the United States) was shown only with proof that the defendant knew of the reporting requirement and intended to commit the crime. The Supreme Court held that the "willfulness" requirement of § 5322(a) should be read consistently throughout the statute, rejecting the contention that structuring itself is so inherently evil that the very act of engaging in structuring satisfied the willfulness requirement.

In light of these decisions and, in particular, the decision in Eisenstein, the government's argument that the decision in Ratzlaf applies only to 31 U.S.C. § 5324 is unpersuasive. Section 5322, the enforcement provision on which the Supreme Court based its decision in Ratzlaf, is the same enforcement provision used against Reguer to make his actions a crime. The Ratzlaf analysis extends the willfulness requirement to all the subchapters of the Currency and Foreign Transactions Reporting Act, including section 5313.

Nor is it of any significance that Reguer's criminal liability arose as the result of 18 U.S.C. § 2(b) rather than directly under section 5313. Section 5313 creates the reporting requirement that is applicable to banks and other such institutions. Section 2(b) makes it a crime to "willfully cause an act to be done which if directly performed ... by another would be an offense against the United States." While "willfulness" under section 2 might not require knowledge of the illegality of the act, criminal liability does not attach to failure to report under section...